Bosch prepares for IoT cloud launch, embraces IoT business transition

Bosch is an industrial monolith, which is on the verge of a huge IoT initiative, as it prepares to launch the Bosch IoT Cloud. Its recently released 2016 results put total sales at $78.54bn, up around 3.5% from 2015’s $75.86bn (up 5.4% once exchange rates are accounted for), employing around 390,000 people globally. As a private company, it doesn’t release the kinds of details you’d expect to see from a public entity, but it lists its earnings before interest and tax (EBIT) to $4.62bn.

Due to its 130-year history, Bosch has been conservative in its strategy. But in 2014, it began overhauling its internal structures to ready itself for the IoT – with a key part of this being the creation of the Bosch IoT Cloud platform. That cloud offering is currently for internal use only, supporting around 5m devices, but Bosch is preparing to open it for public consumption this year, and looms large on the industrial and automotive horizon.

We spoke to Mahesh Chikodi, the head of Bosch’s Engineering and Business Solutions in the UK, to learn more about Bosch’s transformation initiative. Chikodi explained that back in 2014, group CEO Volkmar Denner said that over half of Bosch’s products were not IP-ready – giving rise to the Simply Connected program, which aimed to connect 100% of its products.

The cloud platform was key to this, but Chikodi noted that Bosch aimed to provide the entire process for its customers, from the sensors, up to the software layer, and then into the Bosch IoT Cloud. As a leader in MEMS sensors, shipping around 4.5m each day last year, the company is now planning on ensuring that it plays a central role at the higher layers in the stack.

Key to this is the newly announced Bosch Center for Artificial Intelligence (BCAI), a $322m (€300m) project that will employ AI experts in India, the USA, and Germany. By 2021, Bosch is aiming to have grown the initial 100-employee workforce several times over, with Denner noting that “ten years from now, scarcely any Bosch product will be conceivable without AI. It will either possess that intelligence itself, or AI will have played a key role in its development or manufacture.”

With the expectation that these AI-enabled products will account for around 10% of total sales within 5-years, Bosch is also looking to digital assistants like Siri or Alexa to maintain better direct relationships with its customers, as well as let those customers better interface with its products and services. The Kuri robot, the Mykie digital kitchen assistant, and an assistant-enabled concept car were all on show at CES.

As for its automotive ambitions, the Mobility Solutions division accounts for around $47bn of the $78bn annual revenue. Bosch’s ‘Vision Zero’ is the initiative to achieve “zero accidents, zero emissions, and zero stress,” chiefly via automation, drivetrain electrification, and increased connectivity – established progressive concepts in the automotive industry.

Spending R&D budgets to achieve a battery technology that would make electric driving affordable is a prominent goal, and the prime responsibility of a 300-person campus in Stuttgart – with Bosch investing around $430m annually in its electromobility initiative, with 1,800 staff tasked with drivetrain electrification.

The company says it has already won 30 contracts for its automotive electric motors and batteries, although Tesla-Panasonic are going to be staunch rivals in this space. Bosch also believes that synthetic fuels could help to create carbon-neutral internal combustion engines (ICEs), saying that in 2025, over 80% of new vehicles will still be using ICEs.

The transformation doesn’t seem to be hampering business at Bosch. Only its Industrial Technology division stepped backwards, shrinking around 5%, with Bosch saying that changes in the BRIC markets were the cause. “Despite unfavourable conditions, we achieved our growth forecast in 2016,” said Denner. “Bosch is in the midst of its most fundamental transformation process ever.

We asked Chikodi what was key to this overhaul process, and were told that an important aspect for the cloud platform was cross-pollination – with Chikodi pointing to Bosch’s partnership with GE’s Predix platform, another looming giant in the IoT. Bosch also has major partnerships with Daimler and SAP – two other major German entities that are pursuing the IoT.  Another strong opportunity was Bosch’s own manufacturing centers, which Chikodi said can be powerful sales tools when it comes to showing potential customers the benefits of IoT technologies in the field.

As for the issue of IoT standards, Chikodi noted that Bosch’s involvement in the Industrial Internet Consortium (IIC) and the IoT Security Foundation (IoTSF), as well as the Eclipse Foundation, sees the company focused on open platforms – staying abreast of the developments in those ecosystems.

We asked for recommendations and advice that Bosch might be able to pass on to other companies looking to embrace the IoT. Chikodi said that the Bosch process was heavily influenced by Design Thinking, and that prioritizing the processes that would be easiest to change was important. Those easy processes would lead into pilot projects, that allow you to extrapolate from.

In an age when startups can challenge the titans of their industries, Chikodi noted that it was vital to have a team tasked with changing the prevailing mindset, when it came to pushing through change – but that there is a balance to be struck with not losing sight of the core business values that got you to where you are today.

Of course, if that conservatism is threatening your future, then it’s imperative to embrace what the overhaul team is pushing, but there is going to be quite a lot of push-pull/give-take when it comes to any business – especially one the size of Bosch.