Samsung Electronics Co. Ltd. has taken a leaf out of Google's book and made an acquisition to improve its position in the Internet of Things.
Whereas Google paid in excess of $3 billion to buy a smart thermostat startup called Nest Labs Inc. (Palo Alto, Calif.) in deal that closed in February 2014, Samsung has paid an undisclosed amount to buy Physical Graph Corp., which trades as SmartThings. However, according to a Wall Street Journal report the purchase price is estimated at $200 million, a considerable return for the $15.5 million of venture capital invested in the startup company.
And just as Google is giving the Nest team a chance to operate independently so Samsung will let SmartThings build its business from within a Samsung-funded incubator.
SmartThings has developed a SmartHub and a family of boxed sensors that is sells online and a SmartThings application that allows them to be controlled from a smartphone.
These SmartThings are not low cost -- the hub alone costs $99 -- but they do allow users to turn previously dumb things like lights, fans and other household objects into smart devices that can be controlled or monitored remotely. The SmartHub supports ZigBee and Z-Wave communications and plugs into an Internet Router via an Ethernet cable. It can therefore reach IP addressable items although it does not use WiFi communications directly.
SmartThings was founded in April 2012 in Minneapolis, Minnesota, and was initially funded using the KickStarter scheme. The founders raised $1.2 million against an original target of $250,000 on September 22, 2012. The company had the avowed intent to maintain an open approach that would allow third-party developers to create applications for the SmartThing product and software range.
Since then the company has raised $15.5 million in venture capital and moved to Washington DC.
On August 14, Alex Hawkinson, one of the original founders and CEO, announced on the company's website that SmartThings has been acquired by Samsung and will operate as an independent company within Samsung’s Open Innovation Center group.
"It has always been our goal to create a totally open smart home platform that brings together third-party developers, device makers, and consumers. We’re thrilled that Samsung fully supports this vision," Hawkinson said.
Notably the complete team will relocate to a new headquarters in Palo Alto, California. Samsung recently opened an R&D accelerator on Palo Alto’s University Avenue to act as an incubator for software startups. The company plans to open a similar center in New York.
"We believe that there is an enormous opportunity to leverage Samsung's global scale to help us realize our long-term vision. While we will remain operationally independent, joining forces with Samsung will enable us to support all of the leading smartphone vendors, devices, and applications; expand our base of developers and enhance the tools and programs that they rely on; and help many more people around the world easily control and monitor their homes using SmartThings," said Hawkinson.
David Eun, head of the Samsung OIC in Palo Alto, reportedly said that SmartThings has the most engagement of any smart home platform in the world, complementing Samsung's aim to improve people's lives through the development of connected devices. He said: "We are committed to maintaining SmartThings' open platform, fostering more explosive growth, and becoming its newest strategic partner."
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