Samsung buys Harman for… 8 BILLION Dollars!

The biggest news of the year as far as AV acquisitions go is definitely the purchase of Harman by Samsung.  In the commercial AV space, there aren’t many deals that start with a “B” as in billion, let alone $8 billion.

8-billion

Harman does over $7 billion in annual revenue and is also sitting on a $24 billion backlog as well, with the majority of their revenue coming from technology, software, and services that revolve around the connected car.  Samsung’s stated reason for purchasing Harman revolves around the car with a secondary focus on the lifestyle division of Harman that consists of consumer electronics and technology for the home.

Most of the commentary in the commercial AV space has been centered around the fact that Samsung really makes no mention of their interest in the brands we in our space know and love, creating some speculation about whether or not Samsung will get rid of these brand names and just absorb the product lines into the Samsung family or whether or not they may sell them off to operate independently.

The most commonly cited reason that people feel that the ProAV brands like BSS, AKG, Crown, JBL etc may be in danger is that Samsung does not have a history of letting other brand names stand after acquisition.  Vin Bruno, President of CEDIA, made this point about Samsung’s purchase of Smart Things home automation in 2014.

I disagree with this argument, as brands like Smart Things have no brand recognition anyway.  There is no reason to keep a brand name that no one is familiar with.

The other argument I’ve heard is that $1.1 billion in revenue is insignificant to Samsung anyway given that their annual revenues are over $300 billion.

If you want to evaluate both of these arguments with a real world example of a Samsung acquisition, I suggest you look at the purchase of YESCO in 2015.  YESCO is an LED sign manufacturer that Samsung purchased last year to round out display offerings.  YESCO is still operating under the YESCO name a year 20 months later.  Why?  Because the YESCO name is recognized in the LED sign market.  In fact, you’d be hard pressed to find any mention of Samsung on the YESCO site at all.

See related  ELAN Integrates with Samsung

You could argue that the renaming YESCO would make even more sense because of most people’s natural association of the Samsung brand with display technologies, but so far YESCO remains.  The brands AKG, BSS, JBL, Crown, and AMX are all farther away from Samsung’s perceived core competencies and offer a stronger brand recognition in the commercial AV space.

As for the revenue argument, that Samsung would easily shed the brands or rename then because $1 billion dollars is irrelevant to them?  YESCO’s annual revenue is just over $1 billion US dollars.

I would argue that given Samsung’s desire to own the pocket, in other words to be the device in the pocket that interacts seamlessly with the home, car, office, and public spaces, that in the end they may in fact decide to keep the commercial AV brands AND their strong brand name associations.  If this happens, and they can integrate these brands into the overall strategy of a ubiquitous UX that bridges technologies despite the location, then the Harman ProAV division could benefit greatly from those preferred partnerships and access to even larger markets.

So, is my take all “spin” or will Samsung spin-off the brands we all know so well?

I’d love to hear your take in the comments below.