Hitachi to Invest $2.8 Billion in Internet-Connected Projects
(Bloomberg) — Hitachi Ltd. plans to invest about $2.8 billion over the next three years in its Internet of Things platform as the Japanese maker of power plants, bullet trains and elevators bets the technology will drive sales.
The money will be used for acquisitions, research and development and capital spending, Keiji Kojima, head of the services and platforms unit, said in an interview in Tokyo on Monday. The division will receive 100 billion yen ($918 million) of the investment, he said.
Hitachi is also starting a global leadership team to be headed by Kojima that will oversee the company’s investments in the Internet of Things, the executive said. The team, based in Silicon Valley, will look for ways to maximize returns from combining the company’s operating and information technologies using its Lumada platform.
“We’ll need partner companies as we’re not just going to offer this service on our own,” said Kojima. “I expect there will be multiple companies. We hope to make an announcement within this year.”
The Internet of Things involves linking devices and infrastructure, such as trains, to each other and the Web to manage their operation.
Hitachi has slumped 31 percent this year in Tokyo trading, more than double the 14 percent drop in the benchmark Topix index. The shares dropped 0.7 percent on Tuesday to 480.2 yen.
The Tokyo-based company has teamed up with Vodafone Group Plc to develop a preventative maintenance system for trains in the U.K., using sensors to gather information, Kojima said.
The Internet of Things accounted for about $5.4 billion of Hitachi’s sales in the year ended March 31, Kojima said, equivalent to 6 percent of projected revenue for the company. Analysts expect Hitachi to post revenue of 9.95 trillion yen when it reports full-year results on May 13, according to the average of 16 estimates compiled by Bloomberg.