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SiriusXM Acquires Automatic Labs to Boost Smart Car Products

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【Summary】SiriusXM, a satellite radio company that was once viewed as a leader in connected car services, is in the process of revamping its efforts in the smart car industry. You might know the business for its highly aggressive marketing practices – especially if you’ve just purchased a new vehicle.

Michael Cheng    May 03, 2017 8:05 AM PT
SiriusXM Acquires Automatic Labs to Boost Smart Car Products

SiriusXM, a satellite radio company that was once viewed as a leader in connected car services, is in the process of revamping its efforts in the smart car industry. You might know the business for its highly aggressive marketing practices – especially if you've just purchased a new vehicle. 

To streamline its plans, the brand acquired Automatic Labs, a San Francisco-based company that provides B2C and B2B connected car services. SiriusXM paid a whopping $115 million for the business. Automatic Labs was last valued by analysts at $24 million in 2015 during a funding round (Series B) led by USAA. Other notable participants of the round include Comcast Ventures, Y Combinator and Lumia Capital.

"Automakers, enterprises, and consumers are looking for the best products with world-class capabilities, and our teams will continue to bring innovation to the connected vehicle landscape under SiriusXM." said Gary Clayton, CEO of Automatic Labs.

Was the acquisition price tag for Automatic Labs worth it? Find out below.

A Closer Look at Automatic Labs

Automatic Labs' primary product is connected car adapters – specifically OBD-II dongles that are designed to modernize outdate vehicles with smart features. These units are a hot item at the moment, simply because car technology is being developed and released at a rapid pace. OBD-II dongles are useful for vehicles that are roughly a decade (or more) old. New vehicles don't really need the dongles, as they already have most of the tracking and diagnostic alerts built into the dashboard or infotainment system (such as real-time tracking and mapping via Android Auto).

If Automatic Labs foresaw a profitable future in providing OBD-II devices to consumers, it would not have moved forward with the deal. But the company saw the offer as an opportunity to exit; and it seems like it was due to a timely realization that the market for such products has been exhausted and will eventually get phased out, like tape decks and CD players.

SiriusXM's Revival

SiriusXM has been sitting on the sidelines for quite some time now, allowing other businesses to step in and capture the infotainment services niche. It's competing with a long list of well-established companies, from Spotify (music) to traditional AM/FM radio (real-time traffic, news and weather updates).

Accoding to a SiriusXM spokesperson, the company plans to utilize Automatic Labs' data collection platforms and analytics tools to enhance its existing services. Moreover, it may leverage the brand's growing pool of partners, which currently consists of insurance providers. The satellite radio company has seen great success in collaborating with automakers as a way to push its products into the hands of consumers. It is also likely that SiriusXM will integrate some of the establishment's products into its own services.

"Automatic's innovative products have brought safety and intelligence data and analytics to the forefront of vehicle connectivity. We are excited to welcome the talented employees at Automatic to SiriusXM as we expand the possibilities of connected vehicle offerings and services for manufacturers, drivers, and enterprises," said Jim Meyer, CEO of SiriusXM, in a statement.

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