Soomal Annual Report 2016: Audio


Happy Chinese New Year!

Perhaps in the past many years, we all felt that the audio industry is slow in growing, few hot issues and products, no technology supporting, the best and most interesting ones are the gadgets that are only popular in audiophiles. However, in the year 2016, we did see something different, even though the personal audio applications that we concern most. This includes the breakthrough in both audio hardware and software applications to our concepts and habits, the rejudging in value of consuming products, and the applications in future audio tendency.

Acquisition: Apple & Beats, Samsung & Harman

Apple confirmed it's buying Beats for $3 billion in May, 2014. Samsung announced their acquisition Harman International Industries for $8 billion in an all-cash in November 2016.

What is Harman International? From the naming point of view, it is a Group based on Harman Kardon founded in 1953. After decades growing, it is an audio device Group including Harman Kardon, JBL, AKG, Inifity, Mark Levinson and Studer. Samsung's acquisition is not only on Harman's audio brands and technologies, but also on its Internet of vehicles technology.

In our point of view, the advantage for Harman in Internet of vehicles comes from its audio products, for Inifity and JBL, which are hi-end speakers for cars, connecting vehicle manufactures and Harman. Also, Harman built its ignite platform as "an end-to-end platform that enables connectivity, device management, application enablement, analytics and managed services capabilities."

Let alone for the premium for automotive market. Those premium branded audio solutions that include an array of brands ranging from Bowers & Wilkins, Harman/Kardon, JBL is able to be compared with Beats, BOSE and so on. The goodwill reflects the premium for audio products that has a long history. However, shareholders of US auto parts maker Harman are unhappy with Samsung deal, what will happen this year is not clear.

Let go back to Apple's $3 billion acquisition of Beats 2 years ago. We can not only see Beats' value in audio, music and related culture, also Apple Music's great progress in online music. What's more, Apple has a great influence on the Earphone market structure and user habits. And this is merely the most direct impact in audio and music, not including the film and music industry and other related content.

Dr. Dre combined Black Music culture and beats with Headphone products led to Beats' success. Apple's acquisition utilizes Beats way to optimize Apple's online music in socialization and influence to catch up with Spotify and other stars. While each brands of Harman have its own music and cultural fields Samsung lacks, but how the operation depends on Samsung and Harman's understanding for those brands. If Samsung only has the automotive related business, we are afraid that this acquisition is a failure.

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