2017: When Kitchen Appliance Manufacturers Start Competing with Amazon and Microsoft

Marcus-70100• The German appliance manufacturer Bosch has announced it is building its own cloud to serve customers that connect their Bosch devices to its own-brand Internet of Things. Once it’s up and running, Bosch will look to sell cloud services to other businesses—presumably adjacent manufacturers and service providers (but not direct competitors), e.g., suppliers of consumables such as soap or spare parts, and non-competing consumer product makers.

• It is not the first time a company operating in a sector other than ICT has planned to turn its ICT investment into a profit centre. Could this be one of the few successful examples?

Bosch announced at the Bosch ConnectedWorld event in Berlin last week the launch of its own cloud for web-based services. The Bosch IoT Cloud includes technical infrastructure owned by the company as well as platform and software offerings for the Internet of things (IoT), enabling solutions for smart cities and the connected home. To begin with, Bosch will use it for in-house solutions. From 2017, the Bosch IoT Cloud will be made available as a service to other companies, putting it in direct competition with IT and cloud service providers such as Amazon Web Services and Microsoft Azure.

It’s not the first non-IT company to sell IT services off the back of its own private infrastructure. Amazon itself is a prime example of that. It was an online bookseller and retailer when it started the business that would become AWS. On a more modest scale, large banks and public sector organizations have tried, mostly unsuccessfully, to create external businesses based on their insourced IT assets.

The Bosch Group is not just a fridge and washing machine company. Outside of its consumer goods division, the USD 77 billion company also develops mobility solutions, industrial technology, and energy and building technology. Its portfolio seems ideally situated to benefit from IoT, and it should be no surprise it wants to take the lead for the platform it will use as well as its applications, created using the Bosch IoT Suite, which offers all the functions necessary to connect devices, users, and companies.

Implicit in the Bosch announcement are its plans to offer other manufacturers not just its application suite for connected devices, but rather a full range of IaaS, PaaS and SaaS solutions. If bookshops like Amazon and software vendors like Oracle are doing it, why not Bosch?

External cloud services will never be more than a complementary service line for Bosch, but that doesn’t mean it can’t be a substantial business. One can easily imagine customers of its IoT Suite consuming additional services from the same infrastructure, and in significant volumes. Whether that actually happens depends on the success of IoT Suite itself, but there is little risk to Bosch in positioning itself as a cloud service provider in the meantime. With the investment in support of its own efforts already committed, additional capacity can be added as needed based on actual demand from third-party users—leveraging basic computing resource elasticity to scale up and down as required. To succeed, Bosch should establish a standalone business unit to provide the full range of its cloud solutions internally and externally, dedicating the go-to-market and delivery resources required to commercialize a portfolio based around the USPs of its IoT Suite.

 

About John Marcus
John is a Principal Analyst for Business Network and IT Services at Current Analysis. His focus is on new developments in cloud services and service providers in Europe.

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