OS builder Thundersoft buys UI maker Rightware for $68M to expand in automotive

Thundersoft, a company out of China that designs operating systems for drones and other connected devices, has made an acquisition to drive deeper into automotive technology: it has paid €64 million ($68 million; RMB471 million) for Rightware, a company out of Helsinki that develops graphical user interfaces for connected devices, with a special focus on automotive: its Kanzi product is currently used in some 20 automotive brands, the company said.

The deal should close in early 2017.

Thundersoft makes operating systems and other platform tools for device makers. Acquiring a company like Rightware that focuses on graphical interfaces for automotive systems positions Thundersoft as a stronger offering for customers looking at end-to-end solutions.

There is a clear opportunity here, since car makers are turning to outside partners like these to both provide technology but also guidance in how to navigate themselves as the car industry continues to evolve. (This has also been some of the logic driving car groups buying into mapping companies, and partnering with tech companies to build and develop new in-car systems.)

Thundersoft, which was founded in 2008 and is publicly traded in China, has taken strategic backing from companies like Qualcomm and Intel. It is using the acquisition not only to build out its business in the car industry, but also to help it grow more outside of China. Rightware is its first acquisition outside of China.

“The automotive market is one of the fastest growing segments for Thundersoft, and we are providing in-vehicle infotainment and cluster OS solutions to our customers worldwide,” said Larry Geng, CEO of Thundersoft, in a statement. “Cars are getting smarter — with rich applications and fully optimized OS solutions. Rightware has the best user experience design technology, which will be featured in more connected cars in the market. In combination with Rightware’s unique technology, design knowhow and world-class talent, we can bring more value to our customers and transform the automotive industry with our innovations.”

Rightware — which will continue to operate as an independent company, currently employing 50 but also now hiring more — has been around since 2009 but its last round of disclosed funding was a $5 million round back in 2014, so it seems like this, in part, is one way of expanding its business in a climate where remaining a smaller independent player may have been more challenging.

Kanzi is expected to power over 25 million cars by 2022. With Thundersoft, we can expand this footprint further and support our customers even better,” said Jonas Geust, CEO of Rightware, in a statement. “We see that the specialisation within the global automotive industry software will continue. This creates a huge possibility for us to position Kanzi as the industry standard software solution. The arrangement further strengthens our presence in the growing Asian automotive market and complements our strong footprint in the European and American automotive markets.”

Another notable point is that Rightware originally started out focusing on building a platform for graphic interfaces for all kinds of devices, with the emphasis on phones and tablets, before focusing on cars. This in itself is an interesting shift that speaks to the pace of change in the car world today, and how many have come to see it as a key piece of “hardware” while mobile has somewhat slowed down in growth and development as customers have consolidated essentially on two platforms, Android and iOS. 

Rightware said that current management will remain and “re-invest in the company” as part of the deal. (This presumably means that they have kept a stake in the transaction at least for the initial earn out.) Existing shareholders include Finnish Industry Investment Ltd, Inventure Fund Ky, Nexit Ventures, the current management and the company founders.