Global technology giant Bosch is branching out into sensor technology, and its innovative aspirations hinge on the Asia Pacific region, writes David Woods
German multi-national Engineering and electronics company Bosch is a key player in the white goods and power tools industry, globally, manufacturing devices ranging from washing machines and vacuum cleaners to lawn mowers and electric screwdrivers.
But where the company is growing most rapidly is in the computer chips arena.
In fact, Bosch is well on its way to success, because more than half the cars and mobile phones on the planet already contain Bosch chips. But here lies a marketing conundrum: because consumers tend to associate these innovations with the car or mobile phone manufacturers themselves, rather than with Bosch, the company has to market itself both to other manufacturers and the general public.
Of course, Bosch is not the first company to face this challenge. Intel became one of the world’s most recognizable computer brands following its long-running Intel Inside campaign.
The campaign launched in 1991 and a distinctive five-note jingle was introduced in 1994; by its 10th anniversary, it was being played in 130 countries around the world. The concept was simple: at the end of a commercial for a computer brand featuring Intel motherboards, the viewer heard the jingle and saw the Intel logo, highlighting the importance of the components. The campaign sought – and won – public brand loyalty and awareness of Intel processors in consumer computers.
Bosch aspires to be in a position whereby its components are the must-have devices in every car, in the same way that Intel devices are marketed as the essential components in computers. The global technology giant invited Dialogue to visit its Stuttgart headquarters earlier this year to experience its latest technologies first-hand.
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On its test track, Bosch’s research and development teams showcased their driverless technology innovations: enabling cars to brake automatically for drivers if, for example, a child were to run into the road in front of them; and creating systems allowing cars to reverse into a parking space, with no input from the driver other than the touch of an app.
But just days after our trip to the test track, the news broke that Intel, Google and Microsoft were also competing within the sensor market in a bid to produce driverless vehicles.
This emerging family of “in-vehicle solutions” products aim to help car-makers and their supply chains deliver in-vehicle experiences “quickly and easily“, according to Intel, by providing a complete platform, with processors, operating system and development kits. This pre-integrated, pre-tested and application-ready approach, so powerful in low-cost phone handsets, will also reduce time- to-market for auto infotainment systems by more than a year, claims the chip giant, and reduce cost by up to 50%.
With competitors such as Intel in the mix, the pressure is certainly mounting on Bosch. But, as Peter Tyroller, Bosch’s board director, responsible for the company’s activities in Asia Pacific, tells Dialogue in an exclusive interview, the success of the company’s innovative aspirations rests on his region, not Silicon Valley nor even its massive German HQ. He explains: “Asia Pacific is a growing area for us and we have advanced to 24% of our total global sales in the region – with a target to double this by 2020.” Considering the statistics – countries such as China produce 40 times as many engineering graduates each year as Germany – this is hardly surprising. In fact, in 2013, Bosch invested some €620 million in Asia Pacific, compared to about €280 million in North and South America.
And as Tyroller iterates, “it goes without saying” that globalization and connectivity are major informants of the company’s long-term strategy.
In fiscal 2013, Bosch increased its sales by 3.1%, to €46.1 billion (based on an adjusted previous year figure of €44.7 billion). After adjusting for exchange rate effects, sales grew 6.3%. Bosch disclosed a 6% EBIT margin. This translates into EBIT of €2.8 billion and Tyroller believes this to be an important step toward achieving the board’s target EBIT margin of 8%.
Local development plays a significant role in Bosch’s regional growth. Over the past 10 years, sales in Asia Pacific have more than doubled, to some €11 billion. And, as Tyroller explains, by 2020,Boschaimstodouble its sales in the region once again. Bosch has already injected significant capital into Asia Pacific (from 2010 to 2014, it will have invested €3.3 billion in the region).
He says: “We want to grow strongly in the emerging countries of Asia by offering the low- cost solutions that customers there are demanding. Our airbag light control unit for the Chinese market and our electronic hitch control for an Indian tractor manufacturer show that local success is the product of local expertise.
“By the end of this year, we will have some 45,000 research and development associates on board. Of these, a good 17,000 will be located in Asia Pacific – 2,000 more than at the start of 2014.
“There are major growth opportunities in India and China,” he says. “But China is a hard area and a great opportunity. It’s difficult to talk about the area in general as it is so diverse and heterogeneous. There is a need for local strategies there and, as such, we are targeting local management because it’s clear to us that local managers can deal better there. Around 70% of staff in Asia Pacific are natives rather than foreigners. “We are moving faster because they are industrialized markets. There are one billion more people in the microchip market in India and China, and there is a great opportunity. Wherever there is a chance, there is a risk.
“There is still corruption that is not in line with our values and compliance rules, and we have to be careful to make business there with what we can and cannot do.”
He elaborates: “There are political risks, for example, in Thailand; there is ongoing conflict between China and Japan; there is heavy bureaucracy in India; we need to be careful but there are opportunities.”
Despite the political challenges, untapped opportunities have opened up in the region.
“The next steps for us are to differentiate and innovate,” says Tyroller. “Services are playing a major role and we want to develop products suitable for local requirements, taking a different approach [to other regions].
“In Korea, for example, the business model is very creative when it comes to technology, and we have to adapt to requirements and certain standards. We have to be flexible and speedy. But in saying that, we want to transport our tradition of cars and the Bosch history. This is the kit for our company and our values are very true there.”
But at Bosch, globalization is about more than dynamic growth in Asia. And the company has also set ambitious goals for the world’s other regions.
The company aims to double its sales in North and South America by the end of the decade. In addition to expanding its manufacturing capacity, Bosch is strengthening its local development activities. In Guadalajara, Mexico, the company is opening a development and software centre.
In Africa, too, Bosch aims to increase its sales significantly in the years ahead. In the remainder of 2014, Bosch expects recruitment to grow and headcount requirements to increase – again mainly in the Asia Pacific growth region. Altogether, 9,000 university graduates will be hired around the world.
In order to achieve growth targets, Bosch is also strengthening its global network in a technological sense. Tyroller says the company is not only “doing well” with local innovations in emerging markets, but the Asian engineers also contribute to solutions for the industrialized nations in Europe and North America. The vast majority of Bosch software engineers – more than 9,000 – are located in India. And the company has the foresight to recognize that it can only network its technologies if its technical specialists are part of a network as well.
“We have a matrix of a global network with platforms and specific solutions – global versus local,” explains Tyroller. “We are a networked business and are changing the traditional set-up of our organization. But in saying that, there is a huge investment in the region incorporating assembly lines and other processes in parallel, to create high volumes of products.”Business is looking promising, based on this ambitious and extremely rapidly-evolving global/ local strategy.
“This is what makes Bosch a dual organization,” concludes Tyroller with a surprising twist, given the sheer numbers of staff the company employs. “We have teams in the regions [across the world] and a culture of innovation. We want to think of ourselves as small and fast – because if you think fast, you fail cheap.”
Peter Tyroller Biography
Peter Tyroller has been a member of the board of management of Robert Bosch GmbH since 2006. He is responsible for co-ordinating activities in Asia Pacific including Australia, China, India, Japan, ASEAN countries and South Korea. Tyroller was born in Augsburg, Germany, on 7 November 1957 and is married. In 1984, he completed his engineering studies at the University of Applied Sciences in Ulm. This was followed by a second course of studies in industrial engineering. He began his professional career with Alfred Teves GmbH (ITT Automotive) in Frankfurt, Germany, in 1985.
1992 – Director of the Airbag Systems Unit of Robert Bosch GmbH, managing director of United Airbag Systems GmbH, both in Schwieberdingen, Germany 1994 – Alfred Teves GmbH (ITT Automotive), various executive functions 1998 – Managing director of the Wiper Systems & Electrical Motors Division of Valeo Autoelectric GmbH & Co KG, Bietigheim 2000 – Executive vice-president sales, Gasoline Systems Division, Robert Bosch GmbH, Schwieberdingen 2003 – President with responsibility for sales, Gasoline Systems Division, Robert Bosch GmbH, Schwieberdingen 2006 – Member of the board of management of Robert Bosch GmbH
Bosch: Intelligent Software and Sensors – Basis for the Internet of things and services
Internet-enabled products and internet-based services are one of the focus areas of Bosch’s future sales growth. With its hardware know-how and broad technological expertise, Bosch is prepared to move into this direction. President of Bosch UK, Peter Fouquet, explains: “The number of connected devices is rapidly growing and the trend toward networking is unabated.”
Sensors enable technical assistance in day-to-day life. Describing the strategic significance of sensor technology, Fouquet adds: “Whether we are talking about automated driving or the smart home, a new quality of comfort, safety and efficiency is developing, and Bosch is creating the technical conditions for this change.” In 2013, Bosch produced one billion sensors. This year, a further 30% increase is planned. In the mobile phone market, every second smart phone in the world uses Bosch sensors.
In the UK, sensors in Bosch boilers not only help to reduce power consumption as the unit only comes to life when the user is in front of it, but also accurately
detects the room temperature, and adjusts flow temperature to meet comfort requirements. When coupled with a smartphone, the sensor knows when the user is in or out of the property. The robotic lawn mower, Indego, which is designed and manufactured in the UK, is packed full of different sensors to ensure it moves systematically all over the garden. It operates using a ”lane-by-lane” approach, rather than the more common randomized pattern used by other robotic lawn mowers, ensuring the same patch of grass is not mowed more than once. Each sensor has a specific function; from managing the rational speed of the blade to control- ling the speed of the lawn mower. Many of the sensors are the same ones that are in cars, mobile phones and games consoles.
Sensor technology is also a major technological pre- requisite for future driving. Modern driver assistance systems require ultrasound, radar and video sensors. This year, Bosch will produce nearly 50 million ultra- sound sensors – 25% more than the previous year.
The Nissan Qashqai, built in the UK, is fitted with radar sensors, which continuously analyze vehicles in front while the car is in motion. These sensors are part of the predictive emergency braking (PEBS) system, which continually monitors and alerts the driver of a possible rear-end collision, thus helping to reduce the number of accidents and traffic.
Moreover, Bosch is growing in the area of micro- mechanical sensors (MEMS), a key technology when it comes to networking things on the internet. Sensors enable a new form of technical assistance in day-to-day life – in automated driving, for example, or the smart home. Bosch’s strategic objective is to create solutions for connected mobility, connected manufacturing, connected energy systems and connected buildings.