Article Dr. rer. nat. Volkmar Denner We want to connect the virtual and the physical world Many companies still vastly underestimate the power of the global trend toward networking over the internet.

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  • March 30, 2012
  • Business/economy
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press release

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 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.

Dr. Volkmar Denner is a member of the board of management of Robert Bosch GmbH. He has corporate responsibility for research and advance development, technology coordination, product planning, and technology.

The Bosch Group is a leading global supplier of technology and services. It employs roughly 375,000 associates worldwide (as of December 31, 2015). The company generated sales of 70.6 billion euros in 2015. Its operations are divided into four business sectors: Mobility Solutions, Industrial Technology, Consumer Goods, and Energy and Building Technology. The Bosch Group comprises Robert Bosch GmbH and its roughly 440 subsidiaries and regional companies in some 60 countries. Including sales and service partners, Bosch’s global manufacturing and sales network covers some 150 countries. The basis for the company’s future growth is its innovative strength. Bosch employs 55,800 associates in research and development at 118 locations across the globe. The Bosch Group’s strategic objective is to deliver innovations for a connected life. Bosch improves quality of life worldwide with products and services that are innovative and spark enthusiasm. In short, Bosch creates technology that is “Invented for life.”

The company was set up in Stuttgart in 1886 by Robert Bosch (1861-1942) as “Workshop for Precision Mechanics and Electrical Engineering.” The special ownership structure of Robert Bosch GmbH guarantees the entrepreneurial freedom of the Bosch Group, making it possible for the company to plan over the long term and to undertake significant up-front investments in the safeguarding of its future. Ninety-two percent of the share capital of Robert Bosch GmbH is held by Robert Bosch Stiftung GmbH, a charitable foundation. The majority of voting rights are held by Robert Bosch Industrietreuhand KG, an industrial trust. The entrepreneurial ownership functions are carried out by the trust. The remaining shares are held by the Bosch family and by Robert Bosch GmbH.

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Denner - March 30, 2012

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