The vision at Bosch: over 200 million smart-connected households by 2020

Peter Tyroller, member of the board of management of Bosch Group responsible for Asia Pacific

GERMAN industrial giant Bosch earlier this month launched a connectivity strategy for China, its second-largest market. Its broad range of businesses and technologies — from automotive, consumer goods, building and energy efficiency solutions, and industrial products and solutions — provides a natural resource for the exploration of connected mobility, connected industries, smart homes and smart cities.

It’s product eco-system is in tune with the rapid growth of the Internet of Things in China, thanks to the government’s Internet Plus initiative for integrating the Internet into traditional industries.

Having just achieved record-high sales in China of 77 billion yuan (US$11.7 billion) last year, despite a slowing market, Bosch predicts strong momentum in sales of connected solutions and services.

Peter Tyroller, a Bosch board member responsible for the Asia-Pacific, shared his company’s vision of “connected for life” at a press conference in Shanghai during the Asia Consumer Electronics Show.

Q: Talk about smart homes and smart cities has been going on for years. Turning talk into reality is another matter. Are these ideas still ahead of their time?

Tyroller: It’s a pretty expansive debate, with everyone fielding their own ideas. What matters lies in the detail. For example, with connectivity, Bosch runs an active parking management system that draws on data collected by sensors installed in the pavement of parking spots to record availability. And for buildings, connectivity of all kinds of devices helps boost energy efficiency within a more integrated system. The Internet of Things takes shape step-by-step.

The market for all these visions may not yet be all that large, but people nowadays seem to be willing to spend extra money on connectivity solutions if they bring costs down. We expect some 230 million households to be “smart connected” by 2020 globally.

This will not be a repeat of the dotcom bubble of the early 2000s. Communication technology is much better developed today, and the Chinese government is sparing no effort in upgrading infrastructure that will lead to the 5G era.

Q: Bosch claims to be the only company with a whole package for the Internet of Things, the sensor, the software, and the service. Which part of your specialty do you see as the strongest growth point?

Tyroller: It is hard to see any of them as a stand-alone business because their power comes from cooperation. Sensors are the eyes, ears and noses, software is the brain, and services are deliveries of value. We have a very strong presence in the hardware field, with three out of four mobile devices in China equipped with Bosch sensors.

We are actively developing data mining and analyzing capabilities as our soft skills. In 2015, 30 percent of the 5,500 Bosch researchers and developers in China were working in software development, and this year over one-fifth of our recruitment of university graduates in China will be related to software. We have a target to connect every product we are selling now with the Internet, compared to the current 50 percent. We have a natural reason to explore the idea of smart homes and smart cities because we ourselves make home appliance and supply building and energy solutions.

Q: A Chinese Internet company called LeEco has the strategy of selling hardware cheaper than cost to attract more users into its product eco-system, where they pay for more value-added services and content. What’s Bosch’s opinion on such a bold business model emerging with the Internet of Things?

Tyroller: The Internet of Things will certainly broaden the traditional way of doing business. Will we make our sensors free and charge for services? It is open for discussion. There are already some business possibilities we can explore with the power of connectivity. We can keep insurance and leasing companies posted with how drivers behave and help them develop a new fee rate like “pay how you drive.” With live data diagnostics, we can advise on routine maintenance to operators of construction and mining machines to avoid breakdowns and business losses.

Q: Do you believe that data will become the “new oil,” and whoever owns it will make a lot of money?

Tyroller: I think there will be an increasing number of cooperation models for that in the future. It is not a competition for one to fight alone because data streams come from a connected world. We are in favor of an open Internet of Things and solutions not just for Bosch products.

Q: The merger of the physical and digital worlds raises a lot of issues about security and privacy because our lives now seem easier to peek into. How will Bosch insure that its Internet of Things users are not vulnerable to intruders?

Tyroller: Whenever we handle data, there must be no leaks. For that purpose, we have launched our first Internet of Things cloud-computing infrastructure and platform at a dedicated data center in Germany. Additional cloud services locations are planned for the United States, Singapore and China. We leave the decision to users as to what we can do with their data, when to provide their personal data and when they want to have them deleted. We understand that as everything gets connected, our customers will be more concerned about their lives becoming too transparent.

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