Yoon C. Lee, a Samsung executive, and his colleagues are trying to create another hit from what’s known as the internet of things, technology that stitches together phones, cameras, sprinklers and roads. If they succeed, the effort could propel sales of the company’s electronics, appliances and chips for a generation; if they fail, the troubles will likely deepen.
“Imagine if all the dumb things around you can be connected,” said Lee. “For Samsung, this is a big new opportunity, a huge paradigm shift. It will benefit us across all businesses.”
In a sign of how seriously Samsung is taking the effort, the company is transferring about 500 engineers from its mobile- phone division and allocating them largely to the internet initiative, according to people familiar with the matter. The shift also reflects recognition that the Suwon, South Korea-based company needs another hit after smartphones, they said, asking not to be identified discussing internal matters.
“This is a must-have market for Samsung,” said Neil Mawston, executive director of the research firm Strategy Analytics. “The internet of things will be too big to ignore.”
Though Samsung Electronics is best known for its mobile phones, the company makes everything from televisions and computers to washers, dryers and ultrasound machines. It’s part of Samsung Group, South Korea’s biggest conglomerate, that sells insurance, builds ships, makes howitzers and operates a theme park too.
“Samsung, Apple and Google are all envisioning a world where things such as mobile devices and household goods surrounding us will speak to each other,” said Ko Seung Hee, a Seoul-based analyst at SK Securities Co. “Unlike the others, Samsung can offer a complete line-up of devices and appliances and that’s Samsung’s biggest strength.”
Samsung has been working with Intel to develop its own operating system, Tizen, though the effort has gained little traction. The Korean company is using Tizen in its smartwatches and cameras as it seeks to reduce its reliance on Google.
“Samsung could divorce Google at some point, but considering their own respective interests, they need to sustain the marriage for a while,” said Claire Kim, a Seoul-based analyst at Daishin Securities.
Samsung has also joined Thread Group, led by Google’s Nest Labs, which builds new home automation standards. It also signed a global patent-licensing agreement in February with Cisco, which holds one of the biggest pools of patents in connected devices, to share technologies over the next 10 years.
To demonstrate the internet of things, the company is using its Samsung Innovation Museum, a glass-walled building across from its headquarters, about 30 miles south of Seoul. The five-story, 11,000 square-meter structure looks a bit like New York’s Guggenheim museum, painted almost entirely in white with words carved into the walls: ‘smart living’ and ‘inspiring others.’
“Our first mission is to bring your home to your connected life,” said Lee at Samsung. “At least, you will never have to drive back home for two hours wondering if you have forgotten to lock your door or turn off your gas stove.”