Throughout its 126-year history, the one thing that Robert Bosch GmbH has always done is make things. We produce injection systems and sensors, semiconductors, refrigerators, hammer drills, and much more. As a supplier of technology and services, Bosch primarily manufactures technical products and provides traditional services to go with them – and we will continue to do so. However, we realize that our business models are confronted with fundamental change. Networking over the internet is one of the most powerful global trends, but it is one that many companies still vastly underestimate. We must all come to terms with the fact that we stand before a paradigm shift and that the internet of things and services will bring root and branch changes to the world of business. While this presents huge opportunities, it also poses substantial challenges – and not just for Bosch.

Since the creation of the internet, a number of significant technological advances have taken place. The first step was to link documents to each other, but browser and server technologies later made it possible for several users to work on documents together. This in turn led to the sharing of data structures, and then finally, a few years ago, Web 2.0 gave rise to networks between people. Facebook and Twitter are prominent examples. Today, technology has moved on even further. It is safe to assume that roughly every two years there will be a doubling of computing power, data-transmission bandwidth, and storage capacity in the cloud. And that is the fundamental driver for the technological path to the future, toward the internet of things and services. We want to connect the virtual and the physical world. Specifically, that means we not only build things, but also ensure that those things are networked over the internet, while offering complementary internet-based services which provide customers with added value.

eMobility testbed in Singapore

Bosch Software Innovations designed the charging infrastructure for the EV test bed and is running it for Singapore.

eMobility in Singapore

These networked things might be vehicles that collect data on the volume of traffic in their vicinity and inform each other of traffic jams. Or they could be washing machines that receive information on current electricity prices and only turn themselves on when power is at its cheapest. Another example is our eMobility platform in Singapore. We have created an infrastructure for electric vehicles there. Bosch Software Innovations GmbH developed the virtual extension, a software platform. The internet-based eMobility solution enables drivers to find available charge spots – something that is particularly useful in megacities, where parking space and thus space for charge spots is limited. The platform is open and flexible and allows various additional services to be operated, such as the option for drivers to reserve particular rates or plan routes including alternative forms of transportation.

A variety of business models

It is not just our project in Singapore that shows how the multilayered nature of the internet of things and services allows companies to play an active role on completely different levels. For one, there are the things themselves that are to be connected by the internet: in other words vehicles, charge spots, washing machines, heating systems, and so on. These have to be equipped with IP-enabled components. On this level, simply adding these components to all products can be an attractive business model in itself. On the next level, participants in a subsystem of the internet of things and services (also known as an ecosystem) connect themselves to a software platform, as is the case for example in Singapore with our eMobility platform. The software for this sort of platform needs to be programmed and marketed – another interesting market. And finally, users of a system send data to the platform, which in turn presents new business opportunities. These data can be used to develop services and apps that can then be offered to end users via appropriate portals.

Apps are a risky business

We at Bosch expect that the market for the various products relating to the internet of things and services will experience enormous growth overall and we are preparing ourselves for this development. We already enjoy an impressive level of expertise in all our business areas that are of a technological nature. We consider developments in this regard to be predictable within the normal range of general uncertainties. The same holds true for the provision of infrastructure such as software platforms. In contrast, trying to plan which applications (for instance apps for the iPhone) will become established in the market is an extremely uncertain and tricky business. This is why our approach here has to be exploratory and agile. The Bosch Car Multimedia division, for instance, has already developed a navigation app, and Bosch Thermotechnology has developed smartphone applications for controlling heating systems offered under its Junkers and Buderus brands.

For Bosch, and probably for many other industrial companies too, the main thing is to completely rethink our approach in a few areas. We still have a lot of work to do if we are to make the most of the potential of the internet of things and services. Above all, we must be quick enough to keep pace over the long term with the astonishing speed of developments in the marketplace. Only then will we be able to tackle the challenges that arise from the predictable process of technological development. And only then can we seize the huge opportunities that lie therein – for our customers, our associates, and for the Bosch Group as a whole.

About The Author

Volkmar Denner

Volkmar Denner has been chairman of the board of management of Robert Bosch GmbH and a limited partner of Robert Bosch Industrietreuhand KG since July 1, 2012. His corporate responsibilities include Corporate Strategy, Corporate Communications, Senior Executives, and Real Estate and Facilities. He is the chief technical officer, has corporate responsibility for Research and Advance Engineering, Engineering Coordination, and is responsible for Bosch Software Innovations and Healthcare Telemedicine.

7 Responses

  1. Samir Burshan

    I enjoyed reading your post as I was trying to understand what the “virtual” world was in your title – I VERY much agree that it is the virtual, value added, services that will provide the true value, revenue model and business opportunities that are enabled by IoT. Thank you.

    Reply
  2. Stefan Ferber

    Samir, thanks a lot for your comment.
    Great that you share our view on the importance of true value in services delivered to customers. With the term “virtual world” in the title, Volkmar referres to the digital entities deployed on computers, on embedded devices, or somewhere else in the internet.

    Reply
  3. Hans-Jürgen Kugler

    This is one of the most insighthful statements by a CEO about the impending technological and social (r)evolution I have read in long time.Thank you.

    When Robert Bosch opened his shop 126 years ago, he must have had the intuition that the new market he helped to create would have significant potential. I doubt that he foresaw “refrigerators” or “engine management systems as standard products” (or apps) back then. He helped to open a new field. And this helped to change the world.

    From what you are saying I understand the situation today to be very similar. However, it is easier for an individual or a small organisation to show that level of innovation and agility. Bosch is not a speedboat, thankfully, but a reliable big ocean-going vessel. How can you combine this with the required innovative and agile behaviour? Founding new business divisions for new areas of opportunities is fine, but how about the mental, the underlying philosophical connection to the original core businesses? Risks taking and exploration are often seen as the antipode to the “sound engineering discipline”, especially from a functional safety perspective. How can you avoid Christensen’s Innovators Dilemma? Or is this not relevant, since you are now talking in terms of platforms and communities rather than traditional business models and plans?

    Reply
  4. Stefan Ferber

    Thank you Hans-Jürgen for supporting our strategic view. Regarding your questions I would like to answer along two aspects:

    Purposeful Products for Society
    Something that has always been crucially important is our strategic imperative, “Invented for life.” We want Bosch to create exciting products, and by that we mean not only hardware and software, but also services – products that are created by people with passion. In our view, those of us who freely contribute their ideas and solutions to their own areas of work, showing exceptional commitment to issues, deserve special encouragement and support. In creating exciting products, purely economic success is not our only goal. All our actions and activities are guided and motivated by the desire to benefit society. This is what gives them meaning.

    Business Agility
    The world in which we do business today is characterized by great uncertainty. Global competition is becoming more intensive, not least as a result of new information, communication, and internet technologies. What does this mean for us? We must continue to pursue our objectives and make use of our innovative strength, while remaining adaptable and agile. The internet offers us new technological possibilities for doing so. In its more than 125-year history, Bosch has gone through a process of constant change and development. We are confident that we can continue this process in the future as well. One example is the monthly-flat-feet business model for drivers of electric vehicles in Singapore. Another example is our new lab for business model innovation in the Internet of Things & Services at the HSG in St. Gallen.

    Reply
  5. Vasu

    Dear Mr Denner,

    I really enjoyed reading your article. You really bring the crus of the issue forward – this will really be a paradigm shift – while there will be tremendous opportunities for Bosch as an organization to harness the power of information, ( as part of IoTS) it also brings challenges. I would be interested in your perspective of how you intend to overcome the inertia of the middle management who are normally rooted in their “old school of thought” while engaging the Gen Y and Z who want to cut loose and run after every opportunity.

    The strength of Bosch is the compelling vision of “Inventedfor Life” which is the key driver of the “Why”. How you do things and what you deliver as a result ( the many products that are reliable and innovative) is a by product. It would be interesting to see how the speed and flexibility is built into the organization to make decisions that are good while driving a balance of effectiveness.

    Reply
  6. Stefan Ferber

    Dear Vasu,

    the Internet of Things challenge involves several business and technology changes in markets and Bosch internally. This is not new for Bosch with its 127 years of history where we have experienced
    • the change to mass production,
    • the change to a global enterprise,
    • the technology change from mechanical to electrical, electronics, and software.

    We welcome you driving this change in our company or as a partner. Are you on board?

    Warm regards, Stefan Ferber

    Reply
  7. david alon

    Dear Mr. Denner,
    The challenge of IoT as you describe it “connect the virtual and the physical world – networked over the internet, while offering complementary internet-based added value services” – in my humble believe – need a middleware.
    A middleware platform, open to partners, can create an ecosystem that will make use of many Bosh products and sensors. I read the Bosh have over 50 MEMS and from one item sold over 400M unites. Connecting them to one Bosh platform can create new business models, and many new ventures that Bosh can obtain as a leading manufacture in the sensor world.
    Such platform, best a mobile one, execute some of the sensors data, bridges to other technologies, and deployed to the cloud BI/BA. For the partner ecosystem it is easy to create apps connecting to the middleware that provide communication services Cyber security and QoS. The middleware take care of the rest and allow many new apps to be integrated into one big platform.
    Time are changing fast along with production and technology, measuring IoT things (Big Data) will keep the revenue growing with agility and ease of deployment.
    Warm regards
    David Alon – ISRAEL
    http://www.linkedin.com/pub/david-alon 8200/5a/280/903

    Reply

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