The long-term IoT partnership just announced between Hitachi and Tencent brings together technology giants from Japan and China, with an emphasis initially on smart cities, logistics and manufacturing but with a future eye on autonomous driving. Focused at this stage chiefly on the internal Chinese market, this initiative can be seen through the lens of that country’s trade war and wider tension with the US, which might seem to rule out one of the main alternative IoT partners for Tencent – General Electric (GE), which would also have been seeking such an inlet into China.
The same applies to more traditional IT giants such as IBM and Microsoft. Another major contender, Germany’s Bosch, has already made some inroads into China, with an eye of course on automotive – given its great strength in components there, with the country now its biggest overseas market. Bosch is collaborating with Tencent over vehicle telematics systems, but will be concerned that the latter’s potentially much wider reaching partnership with Hitachi will restrict the scope of that.
For Hitachi, the immediate gain from the partnership will be access to China’s enterprise and industrial IoT market, exploiting its existing pedigree and technology in those areas. That is also a key motivation for Tencent, which wants to expand into business services from its consumer-centric base in games, music streaming and messaging – being most famous for WeChat, its equivalent to Facebook’s WhatsApp, with 1 billion users.
Hitachi is already well entrenched in China for large assemblies such as elevators, as well as aircraft products and components for Consumer Electronics devices including smartphones, amounting to almost $10bn in 2017, around 10% of its global total. But it has been hampered by regulatory barriers that would be at least partially overcome through the Tencent tie up.
In the IoT, there are restrictions over use of foreign-owned servers for storing and processing data which Hitachi can now circumvent by using Tencent’s cloud-based servers. The partnership will then also help unlock other collaborations Hitachi has already established in IoT, such as with the Sichuan government region. It will also aid Hitachi’s participation in the “Made in China 2025” initiative to boost efficiency in communications, railway, automobiles, energy, materials and health care.
From Tencent’s perspective, Hitachi emerged as a front runner for this partnership after its restructuring unveiled in September 2017 involving the unification of Hitachi Data Systems, Hitachi Insight Group and the Pentaho group acquired in February 2015, to form Hitachi Vantara. The new company’s focus is on data and especially IoT data, building a product and technology portfolio around both legacy storage and infrastructure components inherited from its constituent groups and folded into the Vantara IoT platform.
Hitachi emphasized that human-generated data would play a crucial role in many IoT sectors, especially smart cities and connected cars, on the grounds that people through their devices and interactions are an integral part of city and transport ecosystems. This gelled with Tencent’s vision spelt out by its CEO Pony Ma at its Cloud Service Summit in May 2018 around its Three Nets cloud concept comprising the “Internet of Things,” “Internet of Humans” and “Internet of Intelligence.”
While the Internet of Intelligence represents the connection between services and Internet of Things between devices, the Internet of Humans encompasses connections between people through message tools like Tencent’s own WeChat and its instant messaging product QQ.
This leads to the scope of the partnership for connected cars in the light of the apparently surprising lack of a vehicle-mounted version of the WeChat service. Ma explained this was because the service could be distracting and therefore dangerous for drivers. He said the WeChat group was looking at developing a voice-only interface using speech recognition technology and this is where Hitachi may come in.
Hitachi has made significant contributions to research on speech signal processing, especially in noisy environments where it is challenging to separate the target sound from background noise. Hitachi has published a paper outlining technology that allows accurate speech recognition to be performed against a background noise level of 70 decibels (dB), which equates to typical urban environments and also to car interiors when driving at speed. We are hardly suggesting this was the deal breaker but is significant given Tencent’s desire to bring WeChat into vehicles via voice.
The main draw for Tencent was the Hitachi Vantara platform, with its organization around data while incorporating AI and machine learning for analytics. It has been restructured around five layers that can be deployed independently or in total, starting with Lumada Edge, allowing data to be collected, transformed and analyzed near the physical components. This dovetails with Lumada Core, which provides asset registry, identity and access management. Thirdly comes Lumada Analytics featuring the AI and machine learning tools, followed by Lumada Studio to create dashboard applications with ability to issue alerts or notifications. Finally, Lumada Foundry to simplify deployment both on premise and in the cloud, with security and microservices support.
Tencent meanwhile has been developing edge applications particularly around LoRaWAN, with some deployments in government public services. It came as little surprise when Tencent joined the global LoRa Alliance association in July 2018. At the same time, it announced plans to build a LoRaWAN network in Shenzhen, which is one of China’s major centers for technology development.
With Hitachi also having been working on LoRaWAN applications with various other partners including BT in the UK, there is scope for collaboration here too. Perhaps the only concern from Hitachi’s side is the risk all outside enterprises face when collaborating with Chinese companies in high tech areas, which is intellectual property appropriation. Hitachi will be ruefully aware of this being one of the suppliers involved in the controversy over China’s high-speed rail program with accusations that the trains incorporated technology stolen from Japan. But Hitachi like most other companies reckons such risks are worth taking for the greater potential revenue gains.