The German multinational is transitioning from a maker of things to a connector in the Internet of Things and a protector of the data that feeds it.
Bosch is best known for its global dominance in automotive components, as well as its vast and varied product lines spanning household appliances, industrial technology, energy and building technology. But to the 130-year-old German giant, mere “things” are not the way forward. With the growth of the Internet of Things (IoT), the line between hardware and software is blurring. Value is increasingly derived more from services and data than from things. Bosch intends to lead as a supplier of technology and services or “IoT company” that is more than a manufacturer.
In becoming more like a tech company, Bosch does not intend to disavow its legacy. Rather, says CEO Volkmar Denner, it will continue to be a product company, but one that is heavily involved in software, “middleware” and services. Bosch has already invested in software and built a technology platform, Bosch IoT suite, on which it runs IoT services and apps. The company has also launched its own cloud and data centre. This is unusual for an industrial giant, but Bosch is keeping this function in-house, it says, for greater speed, flexibility and data security. The latter is another area it intends to home in on, meeting the heightened need for data security as the IoT world takes shape.
Bosch, which has 450 subsidiaries and regional companies in over 60 countries, no doubt has the resources to reinvent itself. According to The Economist, “Bosch is 92%-owned by a foundation, freeing it to invest in long-term innovation. In 2016 it spent nearly a tenth of its revenue of €73bn ($85bn) on R&D…It also has a €420m venture fund and a startup incubator.”
The main idea behind Bosch’s transformation is to enhance the value of hardware with a “3S” strategy: sensors, software and services. More than half of its electrical products are already web-enabled. By 2020, they should all be. The company has invested €1 billion in a semiconductor plant for chips and sensors. This path naturally leads to artificial intelligence; accordingly, Bosch has also established an AI centre. And since smart machines depend on data, Bosch is collecting all it can, and already “hosts” over 100,000 terabytes annually.
Bosch’s new Coup subsidiary, described as an “app-controlled sharing platform for e-scooters”, is its first direct-to-consumer business. It exemplifies the direction in which the company is headed: Bosch provides the small “e-mobility” firm with the sharing platform only. It has no Bosch hardware. Coup also represents the next phase of Bosch’s long history in mobility, in part. It also invests €400 million per year in developing parts for electric cars, bikes and charging stations. Bosch is also putting considerable resources into the development of driver-assistance systems.
The company believes that its manufacturing sector mastery will continue to count. Even in a super-connected world, says Christoph Peylo, head of the Bosch Center for Artificial Intelligence, “you don’t want to be surrounded by shoddy devices which are cheaply built.”
