Services as a strategic addition to the hardware business

A central component of Bosch's service business is the company's own IoT Cloud, shown here using the example of a connected asparagus sensor.

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Bosch business performance by region.

© Bosch Renningen

Bosch's strategic goal for the future is not only to offer hardware products for connected life, but also services for connecting these products in the Internet of Things. In the connectivity business, the company is focusing on the so-called '3S': sensors, software and services. "Services will become an integral part of our product business. Every sale of hardware should be followed by sales of complementary services," explained Denner. When developing and implementing services for the connected world, Bosch benefits not only from its expertise in software and sensor technology, but also from its broad technology base. "Cars with houses, even entire cities - Bosch can connect many things from a wide range of domains like no other company," Denner added. Almost 50% of all Bosch electronic product lines are internet-enabled. The company will gradually expand the existing service business of all four business sectors.

In connected production (Industry 4.0), Bosch benefits in particular from the implementation experience gained in its own 250 or so plants. The company is translating its internal experience into external services, such as the 'Production Performance Manager', which visualizes production data in real time and independently triggers maintenance processes. By 2020, Bosch expects networked production to result in cumulative cost savings of one billion euros and additional sales of one billion euros. The newly created 'Bosch Global Service Solutions' division is already experiencing strong growth. Among other things, the division's approximately 6,000 associates support the business processes of many customers in various industries or process eCalls on behalf of car manufacturers. In 2015, the division handled more than 120 million customer contacts for more than 1,000 companies in 30 countries, 30 million more contacts than in 2013. Bosch expects annual sales growth of around 15% for the Service Solutions division.

Increasing connectivity will also provide greater convenience and relief in the smart home. The company has been offering the 'Bosch Smart Home System' since the beginning of the year. Further products for the system are set to follow in the course of the year, including a smoke detector which, in addition to its actual function, also provides greater security during the vacation season, for example. Bosch expects the smart home to have a global market potential of ten billion euros as early as 2017. By 2020, around 230 million or 15% of all households worldwide will be equipped with smart home solutions.

In the top-selling 'Mobility Solutions' segment, Bosch's portfolio already extends beyond the car. For example, Bosch is working with partners on a mobility assistant for intermodal transportation. In the greater Stuttgart area, users can use just one app to plan, book and pay for tickets for various means of transportation such as cars, bicycles, trains or buses. Networked parking systems will also have a strong service component. In 'community-based parking', cars themselves act as sensors. The vehicles recognize parking spaces on the roadside as they drive past and report them to Bosch via the Internet. The company uses this information to create a map in real time, on which free parking spaces are marked. Thanks to data mining, real-time parking maps can already be generated from the sensor data of just 6% of all vehicles in moving traffic.

Own IoT cloud as the basis for the service business

The company's own IoT cloud is an integral part of Bosch's service business. The Bosch IoT Cloud provides the technical infrastructure for connected systems. Around 50 of the company's own applications will be running there as early as 2016. From 2017, external customers will also be able to use the IoT cloud as a service. The central software core of the IoT Cloud is the 'Bosch IoT Suite'. It is the brain of the connected world. The Bosch IoT Suite offers all the functions needed to connect devices, users and companies. Big data management enables the analysis of large volumes of data within the IoT Suite. Rules for automated decisions can be stored in the Bosch IoT Suite - for example, when machine conditions indicate wear patterns so that preventive maintenance can be initiated. More than five million devices and machines are already connected via Bosch IoT Suite components.

Development in the regions and divisions

In Asia-Pacific including Africa, the Bosch Group increased its sales by 17% to 19.2 billion euros in 2015 (adjusted for exchange rate effects: 2.8%). The main reason for business development falling short of expectations was the subdued economic momentum in China and other emerging markets. Bosch sees great long-term potential in Africa. The company further expanded its business activities there in 2015. Bosch now has its own branches in ten African countries.

Business in North America benefited from the positive economic development. Sales there climbed by 25% to 12.7 billion euros (6.7% adjusted for exchange rate effects). In South America, on the other hand, the recession in Brazil left its mark. Overall, sales in the region fell by 13% (3.7% adjusted for exchange rate effects).

Business in Europe developed better than initially expected. The company increased its turnover by 3.8% to 37.3 billion euros in 2015. Turnover also developed positively in the home market of Germany, rising by 1.3%.

Business performance by business sector: The Bosch Group achieved an all-time record of 70.6 billion euros in the 2015 financial year.

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Mobility and Consumer grows, Industry weakens

The 'Mobility Solutions' business sector significantly increased growth and earnings in 2015. On a comparable basis, turnover increased by around 12% to 41.7 billion euros (4.6% adjusted for exchange rate effects). The division therefore performed significantly better than global automotive production, which only increased by 2% to 92 million units. The operating return on sales increased to 8.4%.

The difficult situation on the mechanical engineering market was reflected in the development of the 'Industrial Technology' division. Overall, sales fell by 1.6% to EUR 6.6 billion (6.5% adjusted for exchange rate effects). The decline in sales was also reflected in the earnings trend. Industrial Technology reported an operating loss of around 100 million euros for 2015. By contrast, business development in packaging machines was positive.

The Consumer Goods business sector performed very well last year. In 2015, Bosch achieved sales of 17.1 billion euros here. BSH Hausgeräte's sales of around 12.6 billion euros were included for the first time. In operational terms, both the household appliances and power tools business also developed favorably. On a comparable basis, sales rose by around 10% compared to the previous year (5.7% adjusted for exchange rate effects). The division's operating return on sales increased to 7.2%.

Last year, the Energy and Building Technology division increased its sales significantly more than in 2014, with revenue rising by 11% to EUR 5.1 billion (7.2% adjusted for exchange rate effects). The continuous improvement in earnings in the division led to a return of 4.4%.