Samsung buys SmartThings, diving deeper into the 'Internet of Things'

Samsung recently announced that it purchased SmartThings, a start-up that lets users control their connected appliances through a single device. 

Ahn Young-joon/AP/File
A man passes by the Samsung Electronics Co. logos at its headquarters in Seoul, South Korea.

Samsung has announced it will purchase SmartThings, a start-up that lets you turn your smart phone into a kind of remote control for connected devices in your home. Its service falls in line with a rapidly-growing sector in the tech industry known as the "Internet of Things," a catch-all term referring to the practice of controlling everyday objects through the Internet.

The amount Samsung is paying in this deal has not been disclosed, but Re/Code reports that the South Korean tech giant paid around $200 million. TechCrunch also reported last month that Samsung was in talks to acquire SmartThings for that same amount. 

Initially launched via the crowdfunding site Kickstarter in 2012, SmartThings had reportedly raised more than $15.5 million in funding before Samsung swooped in. 

As per the deal, SmartThings founder and chief executive Alex Hawkinson will continue to run the company, but it will move its operations – which currently include offices in Washington, D.C., Minnesota, and San Francisco – to Palo Alto, Calif. There, it will be part of Samsung's Open Innovation Center, Re/Code reports. 

Allowing users to connect devices like lights and door locks to their mobile devices, SmartThings also runs an online platform for developers to create new designs for devices to connect with each other and be controlled through smart phone apps – much the way developers already create new apps for smart phones

In a blog post, Mr. Hawkinson says that SmartThings will remain committed to the same kind of open-source initiatives for developers of smart devices that have helped his company stand out in the connected home market in the past two years. 

"We will continue to run SmartThings the way we always have: by embracing our community of customers, developers, and device makers and championing the creation of the leading open platform for the smart home," he says in the post. 

In addition to a mobile app that's compatible with both iOS and Android, users can operate their digital devices through a home controller that SmartThings sells for $99. Since the company's inception, 1,000 devices and 8,000 applications have been built, according to The Wall Street Journal

Samsung's acquisition follows a recent trend in major tech companies looking to gain a foothold in the connected home market. Google recently acquired Nest, the digital thermostat maker that acts as a hub for your connected devices, for $3.2 billion. At its most recent Worldwide Developer's Conference, Apple unveiled HomeKit, a feature for iOS 8 that, like SmartThings, lets users connect their household appliances through a single framework. 

While Samsung still has the dominant position in worldwide smart phone market share, there are signs that its status in the top spot is beginning to wain. For example, in the second quarter of 2014, Samsung maintained a smart phone market share of 24.9 percent, significantly ahead of its next closest competitor, Apple, which had only 11.7 percent, according to market research firm IDC. Still, that's a dip from the 32.2 percent market share Samsung had in both 2012 and 2013, according to the same data.

Moreover, Samsung said that its second-quarter profits could have fallen by as much as 26.5 percent from the previous year. As The Wall Street Journal reports, Samsung's performance is likely dipping due to its over-reliance on smart phone sales. With little room left for smart phone sales to grow in developed markets and competition increasing from previously smaller and lesser-known players, the Korean company is likely looking to diversify, a possible incentive for expanding into the growing market of digitally connected home devices. 

In a recent example of an upstart giving Samsung a run for its money, the Chinese handset maker Xiaomi, founded in 2010, beat out Samsung in smart phone shipments in China, a market where the Korean company had previously been the consistent No. 1 smart phone vendor. 

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