$137.8B U.S. ad spend for top 200 advertisers
Startup SmartThings is on a mission to make homes smarter -- and now it has Samsung Electronics' massive marketing budget behind it.
On Thursday, Samsung announced it plans to acquire SmartThings, a startup that builds apps for connected devices in the burgeoning Internet of Things industry. The young company will move into Samsung's Open Innovation Center, yet it insisted it will operate independently.
"We'll retain the brand and all the team," said Alex Hawkinson, SmartThings CEO and founder. The company, now with a staff of 54, runs software that connects to some 8,000 apps tied to various devices.
"The vision has already been a very big one: make every home on the planet a smart-home," he added. "We found that complete DNA at Samsung."
In its promotions moving forward, Mr. Hawkinson said SmartThings will maintain its strategy, leaning on consumer reviews and embracing content marketing. "We give everyday things in people's homes a voice," Mr. Hawkinson said.
The company's blog features testimonials from users, such as one family that installed several SmartThings' sensors on items in their beach home just before Hurricane Sandy struck. It has also deployed social media, with Vine's like the below touting its home security feature. "People are better at telling their own stories," Mr. Hawkinson said.
But Mr. Hawkinson did admit access to Samsung's advertising largesse will help. Although he said the marketing details are still being arranged, SmartThings will have access to "every possible imaginable channel" for promotion.
Samsung spent $1.7 billion on U.S. advertising in 2013, according to the Ad Age DataCenter. The company reported $11.2 billion in worldwide advertising and promotional spending.
With its latest move, Samsung is joining Google, which finalized its $3.2 billion purchase of smart-device maker Nest in February, and Apple, which launched its smart-home platform, HomeKit, in June. Samsung and SmartThings would not comment on the price of the deal; other reports have placed the figure at around $200 million. SmartThings has raised about $15.5 million in funding since 2012.
Samsung's Open Innovation Center, opened in Palo Alto, Calif. in 2012, was also the launchpad for its recent digital health smartphone platform, another challenge to Apple. Both handset giants are competing for the new frontiers in connected devices and wearable computing, along with other tech companies like AT&T, Verizon, Qualcomm and, of course, Google. Samsung is also pressing aggressively to market its own smart-home appliances, which run on Tizen, its operating software and a Google competitor.
SmartThings has a decidedly open ethos for its software. It currently runs on Android phones, including Samsung, as well as Apple. The front-page of the SmartThings website displays its app on an iPhone. Mr. Hawkinson said he plans to maintain ties with Apple. "We are completely maintaining our vision of being the most open platform in the market," he said. "We're a lot of big Apple fans over here."