Perhaps we’re too far removed from the conventional financial analyst community, but if Bosch’s results are indicative of growth in the rest of the IoT, we are a long way behind expectations. Growing unit sales in most divisions by 37% would normally be good news, but for a titan of industry, annual sales of 52mn internet-connected things seems most disappointing. If the big guys like Bosch are barely scratching the surface of those multi-billion device predictions, what hope have the minnows.
This isn’t to say that Bosch’s results are disappointing. For any firm, growth in the past year would be a good outcome, given the lingering trade disputes between the two economic superpowers, the impact of Brexit and GPDR in Europe, and Russia’s alleged interference. Rather, a flagbearer for the IoT published a figure that to IoT-outsiders sounds encouraging, but which to those watching the macro-trends, is actually quite disappointing. Intel also only managed to shrink it’s IoT Group by 7% year-on-year, sitting at just $816mn for Q4.
That 52mn is, conveniently, a million devices per week. That’s 1mn new devices that require supporting software and services from Bosch’s partner ecosystem, and which drive economic growth across the board. It’s a positive result, but again, for a company as influential and established as Bosch, the million-per-week scale seems way off the mark, if those oft-repeated forecasts of tens of billions of IoT devices are to be realized.
Nonetheless, Bosch remains positive. Automotive and AI are promising fields for its expansion, and while it has gone pretty quiet about the Bosch IoT Suite, which was once much more prominently positioned in marketing, we certainly can’t say that Bosch has failed in the IoT strategy. It is still bringing heaps of devices to the IoT ecosystem, but extrapolating from its market share, a bit of napkin-math shows just how far the collective industries have to go.
Also concerning is the 2019 outlook that Bosch published, which warns that the global economy is only going to grow by 2.3%. “Our cautious forecast is due to the numerous ongoing geopolitical developments, such as the unresolved Brexit issue and various trade conflicts. In addition, aggressively protectionist economic policies in the form of punitive tariffs or withdrawal from free-trade agreements are undermining consumer spending and investment. Nonetheless, Bosch hopes to develop better than its markets in the current year and, despite substantial upfront investments, to continue to secure its high level of earnings.”
For 2018, Bosch posted revenue of €77.9bn, a record volume, up 4.3%. Privately held, it reports a little differently than most, but claims a 6.9% margin, and earnings before interest and taxes of €5.3bn. It says some €2.1bn in revenue was lost to exchange rates, which is something that global businesses have to contend with frequently.
Mobility Solutions outperformed the rest of the automotive industry, with sales up 2.3% to €47bn – up 4.7% once you accommodate those exchange rates. Consumer Goods hit €17.8bn, down 3.2%, with Bosch saying its power tools were especially badly hit by global exchange rates, saying the segment grew 0.9% once adjusted. Industrial Technology grew to €7.4bn, the strongest growth in the company, at 8.9% or 11% once adjusted. Energy and Building Technology reached €5.5bn, up 2.3%, or 4.7% once adjusted.
As for future work, automated driving, for which it has outlined two distinct development paths. The first will focus on SAE Level 2 and 3 driving systems, an area which it says will generate some €2bn in 2019 revenue, while the second is on the higher Level 4 and 5 functions. The trickier capabilities are going to be the subject of future R&D investment, in the early 2020s, and by 2022, Bosch says it will have spent some €4bn in these R&D projects.
Also in the automation vein, Bosch is targeting the ‘shared mobility’ market, which encompasses ridesharing and public transit, with a focus on electric vehicles (EVs) and their required supporting infrastructure. To this end, Electrification is another R&D focus area, and Bosch says that over a million vehicles on the road are currently powered by its electric motor or hybrid drivetrains.
China is the largest market here, for what Bosch’s chairman Volkmar Denner terms ‘electromobility,’ and Bosch says it leads that market today – and expects €5bn in sales by 2025. Denner said that by 2030, one in four new commercial vehicles will be at least partly electrically driven, and one in five passenger cars. Denner thinks that “in the future, people will say that there’s no electric car on the planet without a bit of Bosch inside.” Newly unveiled electric batteries are key to this strategy, and Bosch acquired EM-motive to bolster its portfolio here.
The second phase of electromobility is more long-term, with Bosch citing an ITF prediction that global goods traffic will have doubled by 2030. Batteries for cargo e-bikes, electric motors for light goods vehicles, electrified axles for trailers, and even fuel-cell designs for the heavies trucks are part of the plan, but this is a huge overhaul of the global supply chains that currently churn out internal combustion engine (ICE) powered vehicles.
Unsurprisingly, AI is another major focus. Bosch is planning on going from a thousand to 4,000 AI researchers by 2021, looking to leverage its domain expertise in buildings, manufacturing, and traffic, to steal wins from the more industrial-focused American and Chinese companies that are so avidly chasing AI. With some 150 research projects underway, with the SoundSee system being deployed to the International Space Station this year, Bosch believes it has a lot of headroom in this space.