"The Samsung board of directors and management committee approved a deal that will transfer 32.4% of shares in Samsung Techwin to Hanwha for 840 billion won (US$758.9 million) and 57.6% of shares in Samsung General Chemicals (excluding treasury stock) to Hanwha Chemical and Hanwha Energy for 1.06 trillion won (US$1.45 billion)"
That values Techwin, as a whole, at ~$2.3 Billion USD, that is less than their annual sales (~$2.6 billion USD).
Of course, it is hard to break out / value the surveilance business, since Techwin's surveillance sales are a distinct minority of the overall company.
This sounds like the sort of deal where the surveillance business was basically "thrown in" with the rest of the business units that actually had value to Hanwha. I wouldn't be surprised if the surveillance business withers away, or more likely is sold/given to Dahua or someone similar.
If the security business unit has some core patents, then they may have future value. If they were mostly just another camera, but sold under the Samsung brand name, they have little future (IMO).
The CCTV camera market is quickly stabilizing in the sense that you have some companies with strong brands building cameras that are generally higher regarded or specialized (Arecont, Avigilon, Axis, Bosch, etc.) and companies with strong brands building cheaper/budget cameras (Acti, Dahua, Hikvision), and then a "whole bunch of others". You've also got the really low-end no brand stuff.
If this business unit loses the Samsung brand name, they are going to be forced to compete with the Dahuas (low price, but good build quality) and establish a footing in a VERY competitive market space that is also using a very different channel strategy than what Samsung is used to.
At first I was looking for the "This is a joke" option in the poll. You should have included that just to see how many people picked it. Seriously, I was like "Is this a new Nov 29th Fools Day?".
I guess not. I agree that without the Samsung name, they may end up being compared to Dahua, Vivotek and Hikvision (at least here in the US) and then they'll be expected to compete more in price. The Samsung name allowed them to be compared with Sony, Axis, Panasonic, etc. At least as far as perceptions went in name recognition.
Arecont a strong brand? Well, it is pretty recognized and their multisensor panoramics are still popular.
The Samsung sell off is likely the least of Pivot3's issues. It might disrupt cross selling through Samsung Techwin but we have not heard that this relationship was critical anyway.
Pivot3 still needs to figure out how it can generate anywhere near the revenue levels of the massive investment into it. Over the past few years they have tried to diversify into VDI, but even from their own statements it does not appear that they have really taken off their yet. Their most recent surveillance offering is a VDI application - Virtual Video Surveillance Viewing
Makes sense. The Samsung name is their biggest asset by far, and I say that as a fan of their IP line. Without the Samsung name, what do they have? Is Hanwha going to spend a bazillion dollars on an ad campaign to reintroduce the line?
According to an article in one of the leading Korean newspaper lately, there is a rumor that Hanwha may sell Techwin's CCTV business out to a third-party already in CCTV business as it is not among Hanwah's core businesses. I believe this would be one option that Hawha is seriously weighing.
Interesting. I was talking with Samsung about coming onboard a few months ago. Conversations were going swimmingly, and then suddenly went up in non-communicative smoke. Not sure if it's related, but I'm glad that one fell through!
This maybe a silly question but is this the only samsung in the security camera business? Several years back there was techwin and another samsung division both selling in the US. We refered to them as North and South Korea. I thought they merged or one shut down but I wanted to ask.
How is Samsung Electronics positioning with Thread and Internet of Things consistent with this sell off?
Is this the first of reality checks by big players, who are starting to assess their relative profitability of surveillance products compared to core businesses (eg. phone manufacturing, software, advertising,...). Is this the beginning of similar moves by other providers like Apple, Google, ... ??
I don't see this as having any relation to what Silicon Valley companies are doing.
The Samsung move, according to Korean accounts, is more about succession planning. Also, what Samsung sold (except for CCTV), things like defensive equipment and chemicals has little, if nothing to do with IoT.
Samsung electronics still has all the core consumer products.
The camera biz was a drop in the bucket for Techwin. It may be that the new company will take what good engineers it can and sell off what is left of the camera biz or close it down. They certianly wil not be selling any cameras if they dont get this worked out fast.
Something tells me this is more about the rights to sell and import royalties which are big in Asia.
I believe this is all about China and OEM'ing. Specifically when it comes to analog and marketshare. I heard something earlier in the year that surprised me. Samsung has the analog marketshare in China and not Dahua or Hikvision.
Keep your eye onEyenix. They created the Digital Signal Processor for Samsung. I see more and more Chinese no-name companies are incorporating them into a final solution.
For some strange reason, foreign companies dominated china when it came to analog marketshare. It was companies like Samsung, Sony, LG and Panasonic who had the top marketshare in China when it came to analog security cameras.
We are getting feedback from Samsung partners who have talked to their Samsung reps.
The party line is that this is a good deal, they are excited about, it is going to help spur more investment into video surveillance products, etc. Also, they say they are going to keep the Samsung brand.
Decide for yourself whether that's the truth, a lie, or simply wishful thinking given the early status of things.
It seems odd that there would be conflicting reports on 'keeping' the brand considering the 'brand' itself is valued at estimates ranging from 30 billion to 80 billion on its own.
More likely is a phased de-emphasis from Samsung Techwin to Samsung Techwin and finally just Techwin. Thisoccuring over a finite length of time, <2yrs, so as to smoothly transfer as much goodwill to Techwin as possible before disappearing altogether.
If they did get the brand in the purchase price, they got a good deal! Then teaming up with a big manufacturer with a little brand, would be a powerhouse combination.
Our Samsung rep told me not to expect any changes. The sale ammounted to a 32% stake in Techwin. Since this is the case, he doesn't anticipate any changes in R&D money or in the name. He also said that there were a lot of Manufacturers trying to put a negative spin on it.
Samsung Techwin America President Soon Hong Ahn said in a statement. “Most important is that our Samsung brand will remain intact and this partnership will be otherwise transparent and seamless, as management and all operations at Samsung Techwin will remain the same with no significant changes in the foreseeable future.”
According to Jon Cropley, principal analyst for video surveillance and security services at IHS, Samsung Techwin has grown rapidly over the last decade and was estimated to be the fifth largest supplier of video surveillance equipment globally in 2013. Despite their success, however, Cropley said that 2013 was a rough year for the company as they didn’t manage to gain market share.
Update: A report from a Samsung Techwin press conference claims that a 'branding agreement [to retain Samsung's name] is still in negotiation, but is assumed to be for “many years”. How many years will be critical. One comparable is the GE Security / UTC deal where UTC was allowed to use the GE brand for 2 years. However, once that period is over, the brand is lost.
Everyone who reads and pays attention will know its not Samsung "Samsung" and you can bet the competition will point it out regardless. Its not the people who make your TV or cell phone anymore. Not saying they will be a bad product, in fact if they decide to, they could be better. Depends on motivation and where the technology really came/comes from (trickle down from Techwin or left over from Samsung Electronics / or new goodies from the new owner entrenched in the defense business). In the end they will be just another ODM (maybe ODEM, since they still "may" make their own processor in Samsung's foundries) manufactured in China now instead of Korea. Their decision on if they will be an A, B or C level player, or to ponder options, sell the camera biz off down the road as not part of their core business. None of us really know, its just all speculation.
Lets worry about more important things like where everyone will finally decide to mount body cameras on law enforcement officers so that they are considered "highly effective in all situations". Then the camera manufacturers can go after that market and we can move on from this subject.
According to the parties, the transaction is not scheduled to close through next year. Ergo, why points #1 and #2 are more statements of hope than fact.
As I cited earlier, another report from that press conference reports a "'branding agreement [to retain Samsung's name] is still in negotiation, but is assumed to be for 'many years'"
If you compare this to Samsung Techwin's official press release announcing the deal, you will notice that they specifically leave out any reference to brand or management continuity, only saying that:
“Customers can be assured that it is ‘business as usual’ and that there will be absolutely no disruption to the supply of products or to the normal high levels of pre and post sales support that customers have come to expect from Samsung Techwin.”
Products and support are guaranteed, nothing else.
Now, Techwin might be able to keep everything - management, policies, branding, etc. but that is still to be determined.
Also, critically, what needs to be determined is how much Techwin needs to pay for the Samsung brand and how will that impact pricing?