The International Consumer Electronics Show (CES), which wraps up this Friday in Las Vegas, features a whole range of products and no shortage of innovation. The overriding theme emerging from this year’s show appears to be connecting everyday items to the Internet, creating – aside from well-worn buzzwords – the Internet of Things.
With the likes of Apple and Microsoft absent, BK Yoon, Samsung’s CEO, and Mark Fields, CEO of Ford, were among those to deliver keynote speeches over the course of the week. On the surface, the two companies they lead are opposites; different industries, different continents, different trajectories. However, Samsung is beginning to confront a challenge that Ford is but all too familiar with: pressure for market share from a new, aggressive competitor employing efficient production methods.
In 2014, Samsung saw its global market share slip from 32.2 percent to 23.7 percent, according to data from IDC, as middle tier smartphone manufacturers Lenovo, LG, and Xiaomi grabbed bigger chunks for themselves. The exact effect of this new competitive landscape on Samsung’s fourth quarter earnings, to be announced later this month, is not yet known, but it doesn’t look good; in its pre-earnings guidance, the company forecasted a 37.4 percent year over year decline in operating profits.
These changing market conditions, then, have instilled a greater sense of urgency as Samsung makes its push into connected devices, the central theme of its time in Las Vegas. In his speech, Yoon declared that the Internet of Things is no longer “science fiction,” but “science fact.” Samsung figures to insert itself through SmartThings, the company behind the automated home sensor and hub system it purchased in August.
Founded in 2012 in Washington, DC, SmartThings is an app that works in tandem with sensors to turn household appliances like lights and fans into smart devices that are optimized for efficiency. For example, a SmartThings-enabled light bulb will turn itself off when it detects that there’s no one in the room. The newest iteration, unveiled at CES, boasts a faster processor, more battery power, and cellular connectivity, which would allow the system to function through an Internet or power outage. There’s also a new premium service, where users can sign up to receive text alerts in case of an emergency, like a flood or fire.
The $200 million acquisition of SmartThings allowed Samsung to enter a market just shortly after its main competitor and collaborator did. Apple introduced Homekit, a hub for controlling otherwise disparate connected devices, at its annual developer’s conference in June.
Google, meanwhile, purchased Nest Labs, the maker of connected thermostats, smoke detectors, and other devices, in January for $3.2 billion. As it stands now, Nest is the clear market leader. This was made clear at CES, where it announced that LG, Philips Hue, and thirteen others would join existing partners like Whirlpool and Mercedes-Benz in its “Works with Nest” software program.
Like Samsung, the Internet of Things is at an inflection point. Will it be cast aside like Google Glass, as superfluous, invasive, and uncool, or will it have staying power in its current form? In acquiring SmartThings, committing to build IoT capabilities into all of its products within the next five years, and promising to invest at least $100 million in developers building an open framework for the IoT, Samsung is certainly banking on the latter.
Homebrewed 