Editor’s note: Ezra Gottheil is Principal Analyst at Technology Business Research.

HAMPTON, N.H. – Despite being a $77 billion company with a 4-year-old Internet of Things (IoT) cloud platform and success selling and deploying IoT services, Bosch is often omitted from lists of major IoT products and platforms. There are several reasons for this.

The company derives more than half its revenue from Europe, and less than one-fifth from North America. It is a German manufacturing company and is very conservative in its announcements and claims. Most important, however, is the fact that it is vertically specialized.

Bosch is a leader, and will continue to be a leader in industrial IoT, especially in Europe and in its subverticals — mobility (vehicles), industrial technology, energy and building technology, and consumer goods (appliances and tools). Bosch is a huge industrial company that has had to integrate information technology into its traditional business for many years and has, for several years, invested in IoT, which spans information technology (IT) and operations technology (OT). Because of the size and scope of its industrial business, its deep interconnections with other industrial companies, and its long-term commitment to integration of IT and OT, Bosch is an important IoT company and is well-positioned to expand its role in IoT.

One of Bosch’s challenges, similar to most businesses, is growing out of its existing markets, to apply its intellectual property to solve business problems in markets where it is not currently engaged with either partners or customers. The company’s other main challenge is to make itself visible to business management and IT audiences inside customer companies. This is a common problem for IoT companies; there are many buyer roles and it is difficult to reach all of them.

IoT gives vertical companies like Bosch the opportunity to encroach on IT

Specialization is one of Bosch’s strengths in IoT, but it also constrains its market and the breadth of the audience for its messages. Specialization is one of the key differences between OT IoT vendors and IT IoT vendors. IT is largely horizontal and OT is really a category that spans a wide range of separate vertical technologies and vendors. IoT solutions contain both horizontal, generally useful, components and specialized components. The specialization ranges from broad, applicable to many solutions in a vertical, to narrow, applicable only to a specific process in a specific company.

TBR believes that companies specialized by vertical and narrow subvertical are very important players in the IoT market. Unlike IT solutions, IoT solutions are intrinsically specific to a business, a business process, and to the problem being addressed. Vendors that bring their specific expertise, embodied in their products, services and people, have an advantage in helping customers construct solutions.

Bosch has the advantage of being both narrowly focused and huge. The challenge for horizontal IT companies is to make their horizontal solutions relevant to specific problems; the challenge for vertical OT companies is to fully leverage the parts of their solutions that are applicable outside their specific expertise. Both types of companies face a go-to-market (GTM) problem. Because IoT integrates IT and OT in service of business objectives, there are several audiences inside potential customer companies that must be reached and satisfied. IT companies address IT departments well. OT companies have a distinct advantage with the OT departments of their customers, and may be well known inside their verticals, as Bosch is, but they lack a similar advantage with OT departments of other companies.

Complexity is on Bosch’s side

Manufacturing, even without the complications of IoT, robotics, and digital transformation, is a very complex business. Manufactured goods are made from components from many sources. Bosch, for example, does not make automobiles, but it is a supplier to most major automotive vendors. The manufactured devices themselves are complicated, as are the components. They must be designed, prototyped and tested. The same is true of the manufacturing process, which involves additional vendors and vendor relationships.

Engineers and engineering organizations are very conservative, as a mistake at any step is costly, and a commitment to go forward with a flawed design or process risks losing even more.

Because of this conservatism, and despite the current rapid adoption of IoT in industry, industrial IoT will expand for many years. While industrial IoT is far older than the term “IoT,” TBR believes industrial IoT will not only continue to grow, but that its growth will gradually accelerate for at least five more years. We believe Bosch, with a 4-year-old IoT platform, will continue to grow and expand its IoT business.

Bosch understands the complexity of manufacturing completely and deeply. It applies both to Bosch’s business and the businesses of its customers and partners. This deep understanding gives Bosch, and other industrial companies in IoT like GE (NYSE: GE) and Siemens, an advantage in helping customers fully leverage the potential of IoT.

Conclusion: IoT is where IT and OT collide and collaborate

The big IT companies that have committed to IoT, like IBM, Microsoft and SAP, are selling aggressively to IT departments and customer companies’ management. IBM reported 50% year-to-year growth in its IoT customer base in 2016. These companies, with their horizontal products and services, are signing up customers while OT departments are evaluating offerings from companies like Bosch. But this doesn’t mean that Bosch is shut out.

Bosch partners with every one of these IT companies. For example, in mid-February IBM announced a partnership with Bosch at the opening of IBM’s IoT headquarters in Munich. TBR research shows that almost every IoT solution involves several vendors, and more than one-third of the solutions involve two or more IoT platforms. As IoT deployments evolve, TBR believes companies like Bosch, with relevant knowledge and understanding of customer businesses, will play increasing roles.

For that reason, TBR believes Bosch’s engagement with customers will grow over time, even where companies with more aggressive marketing, like IBM, may have originated the engagement. IoT reflects the complexity of the businesses that build and use IoT solutions.

TBR believes that IoT solutions will proliferate in customer companies and will increasingly integrate with other IoT solutions, other non-IoT solutions, and with partner company systems. As with manufacturing itself, Bosch’s IoT solutions will play an increasingly complex role in industry.