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Bosch navigates IoT transition, ponders battery production, hits €73bn sales

On the back of its full-year results, Bosch invited us to attend its Annual Press Conference and a tour of its facilities in Stuttgart – paying for our flights, hotel, and food. Disclosure aside, the visit illustrated the importance that R&D and startups to both Bosch and other giants that must embrace the Internet of Things – a trend that is as potentially rewarding as it is disruptive.

Sitting in on the announcement, listening to it be translated from German to English in near-real time, the initial focus appeared to be on addressing criticisms of diesel engines – in the wake of many cities considering bans on the engines in order to address air quality regulations.

Bosch CEO Volkmar Denner argued that such a move was a knee-jerk response, and that with modern particulate filters, diesel engine particulate emissions were negligible, with lower total CO2 emissions. In addition, Denner noted that engine emissions are only about 12% of the total automotive particulate emissions thanks to brake disc dust and worn rubber from tires, and Bosch’s new iDisc is being offered as a solution to that particular problem.

In other automotive news, Bosch’s recent Nvidia deal sees it source silicon from the GPU giant, for use in the Bosch AI Car Computer, as well as announce a deal with Daimler to deliver fully autonomous cars within five years – both unveiled at Bosch’s Connected World event in Berlin.

After highlighting strong financial performance and an expanded R&D strategy, Denner said that AI-based technology, the IoT, and mobility solutions are key parts of the Bosch transformation. As part of wider industry shifts, Denner said that the change is good for Bosch, and driving its entrepreneurial spirit.

According to the presentation, Bosch shipped 27m web-enabled products in 2016, and is aiming for all of its electronic products to eventually form a part of the Internet of Things. The upcoming public launch of its Bosch IoT Cloud, which currently supports around 5m devices internally, is the next step in Bosch’s IoT journey, which is also being augmented by the company’s open source contributions and joint projects with other major IoT players – such as AWS, IBM, GE, SAP, and Software AG.

Moving into a slightly heated Q&A session, which saw Bosch fending off questions about the recent Dieselgate fiasco, the potential for diesel engine plant closures, and its lack of women in leadership positions, we learned that Bosch is currently carrying out an evaluation of whether it would begin manufacturing automotive battery cells – with a decision due at the end of the year or in early 2018, which would bring it into competition with Tesla and Panasonic, LG Chem, and Samsung.

As for IoT related questions, the board were slightly deflective – telling us that Bosch doesn’t break out the IoT and cloud numbers in its results, and wouldn’t gesture towards the percentage of future revenue that those divisions would account for. The company did note that in certain areas, it has seen rapid progression, such as its boilers, where it moved from 10,000 to 100,000 connected units within a year and is now approaching 1m. Its Bosch Home Connect smart home platform is also said to be growing well.

Bosch Start-Up Program:

So with batteries and the IoT, Bosch is evolving – looking to modernize its portfolio. Proof of this was seen on a tour of Bosch’s Start-up Program (BOSP) –  a legally separate entity that Bosch uses as an incubator for internal and external business ideas. With an investment program, the division acts as a means for Bosch to explore new approaches that might eventually be absorbed into its core business, or sold on as standalone entities.

Currently in the process of expanding its offices, moving into a very trendy open-plan warehouse, BOSP CEO Peter Guse explained that Bosch had been founded when the world was moving between steam and electricity. Now, he said that the transition was between digitization and AI, in a move that will severely disrupt traditional business models.

Guse said that BOSP was the mechanism that allows Bosch to explore this disruption, acting in a manner more akin to agile startups, and without the constraints of the core business hanging over the projects – and a set of business rules that Bosch has compiled over the past 130-years.

The current incubated projects span consumer and business, ranging from smartphone apps to connected machinery, and while it’s still early days for BOSP, three of its startups are already selling their product and preparing exits. Integrating them into Bosch is a primary goal, and Bosch is looking on creating another incubator in Bangalore, India.

BOSP uses a five-stage process, that starts with Ideas, where a team presents their concept, before moving to Discovery, which assesses the viability of the idea in the market, before Incubation, Scaling, and finally the Exit. Guse noted that about 80% of the ideas that BOSP sees in the Discovery phase fail, but both Bosch staff and external entrepreneurs are able to pitch.

Zenoway presented its connected forklift warehouse system on the tour, which uses video cameras attached to the vehicles to locate them inside a warehouse, or GPS for outdoor navigation, and present the location on a live dashboard that a manager can use. Driving rules can also be enforced here, forcing drivers to slow down when near other forklifts or door frames – where a crash or outage could cripple the workflow of a warehouse for hours.

The dashboard can also display data from the items being moved around the warehouse, allowing for things like shock alerts to help preempt damaged goods. All this data can be pushed to ERP systems, and Zenoway has already installed around 800 systems in the EU. It claims a 30% increase in uptime, with many customers being very fond of the safety features.

Deepfield Robotics demoed its connected agricultural sensors, as part of its Internet of Fields/Animals/Plants focus, and is currently in the second year of selling its asparagus probe – which sits inside the tents that are used to grow the plant and regulate its temperature. Fluctuations can ruin a crop, and so the sensors are valued as a means of reducing waste.

The company’s second product is aimed at berry crops, specifically to regulate frost protection, with the company’s Project Manager for IoT, Christian Lasarczyk, noting that German farmers had lost up to 75% of their berry crop this year due to frost. The protective plastic tunnels used can also be detrimental to the berries, requiring a careful balance between irrigation and humidity.

With the asparagus sensors, backhauled by 2G connections currently, priced at €319, the company claims a couple of hundred installations to date, over the past two years. The next step is into beekeeping, with a prototype hive monitoring system on display that monitors the weight of the hive to gauge honey production, with a radar system for monitoring bee movements for optimal hive placements.

The last startup on show was Mobikee, an application that essentially consolidates the different mobility services that offer consumers ways to travel, inside a single a application that allows them to purchase a trip via a single interface. Only a year into the project, Mobikee is illustrative of Bosch’s new software and services focus. Mobikee is launching in Germany in June.

Board Briefings – Industrial, Energy, and Automotive:

The second day of the tour kicked off with sit-downs with Bosch board members, ahead of the imminent press conference – the main billing. Stefan Hartung, who heads up Bosch’s Industrial, Energy, and Manufacturing activities, was on hand to answer our question about the challenges in industrial side of the IoT.

Hartung said that the market has huge brownfield (retrofit) opportunities, which can be addressed with the plethora of sensors that are available in the market today that can be installed without having to touch the sensitive PLC or ICS systems that are controlling the equipment.

In terms of the shifting collective thinking in the industry, Hartung said that data had always been backward-looking, with a focus on post-fact analysis. Now, thanks to the IIoT, as part of the Industrie 4.0 trend, industrial applications are moving to a six-month future view – with the end-goal of Industrie 4.0 being a global and communal real-time view of operations.

That shift might require a broader shift in industrial IT departments, which are quite conservative according to Hartung, as they move away from on-premises data storage and applications, to a cloud-first model. Bosch itself seems quite conservative in the scale of the IoT-leaning industrial offerings, forecasting the trend to generate €1bn in new sales by 2020.

While global manufacturers have obvious self-interest in Hartung’s vision of a real-time global visibility platform, there is room for smaller companies and tangential businesses (logistics, retail, etc.) to join those platforms for shared benefits – as long as those industrial vendors don’t hoard that data – and can be convinced of the benefits of sharing it.

Our next appointment was with Dirk Hoheisel, in charge of automotive systems integration, automotive electronics, and car multimedia, who said that emerging mega-cities require a new approach for ‘multi-modal’ transport – the kind being focused on by the likes of Mobikee.

Noting that around 40% of peak London traffic can be attributed to delivery services, Hoheisel said that logistics is well-placed to be the first adopter for new technologies in the last-mile of delivery, but noted that in the short-term, only the largest fleet operators are going to be able to wholeheartedly embrace self-driving technology.

He added that parking solutions are a priority for Bosch, which plans to showcase the first autonomous valet function within the next year, focusing on the infrastructure involved in adding smart parking systems to buildings and garages – the cameras and laser-scanning units.

ADAS systems and SAE Level 3 and 4 capabilities are also in development, and Hoheisel was on stage at Bosch Connected World to reveal Bosch’s recent collaboration with Nvidia in this regard. Nvidia will be supplying its Drive PX platform, based around its new Xavier processor, as part of Bosch’s AI Car Computer. As part of its ADAS offering, Bosch is also planning to showcase its Traffic Jam Pilot and Highway Pilot Level 3 systems, that will provide self-driving functions in their namesake environments.

As for development ethos, Hoheisel said that Bosch would never rely on external communications for driving instructions such as emergency braking or lane-shifting – as a safety precaution. Bosch has a clear opinion on the matter, that the vehicles should drive themselves independently, and while Hoheisel said that the latency reductions seen in 4G and 5G are promising, Bosch-powered cars would be using them as ancillary services, not primary instructions.

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