Global Mega-Trends & Implications for High-Tech, Part 2

In the first part of this blog, I highlighted key global developments described as "mega-trends" by Frost & Sullivan in a report and which I believe have significant implications for all segments of the electronics supply chain. In this concluding blog, I explore the other mega-trends taking shape worldwide and offer my perspective on how companies -- equipment vendors and their supply networks -- can benefit from the positive aspects of these developments while avoiding the sinkholes inherent in them. (See: Global Mega-Trends & Implications for High-Tech, Part 1.)

Here are the other mega-trends identified by Frost & Sullivan. I paraphrase below, but you can read the original here (registration required).

• Technology goes into overdrive. The world is in the grip of a major wave of technological innovation that is reshaping all parts of human existence and associations, including at the levels of individuals, government, and businesses. Each of these groups will have to figure out how to respond to the technological developments in areas like satellite communication, automotive intelligence, broadcast and broadband communication, robotics, drug delivery and innovation, automated payments, and intelligent traffic control system applications.

  Over the next decade Frost & Sullivan sees the rapid deployment of "pervasive robotic technology that will act as a domestic help in everyday life." The robots would be involved in domestic activities (as pets, for instance), companionship, waitressing, strategic planning, and business. On the business front, the use of robots, or artificial intelligence, would facilitate manufacturing (welding and drilling), space exploration, medical, material handling and packaging, transportation, and military.

  I have spelled out above the different areas where technology is deepening man's interaction with robots, because in each one of these areas there are opportunities for all players in the electronics industry, from the design all the way through to product warranty fulfillment and end-of-life equipment disposal management. Where does your company fit in here, or where can it play a role if it doesn't already?

  Additionally, the experience of Apple Inc. (Nasdaq: AAPL) has shown us that the walls separating high-tech companies are being torn down by visionaries who see themselves primarily as total service providers and not simply hardware or software vendors. The technologies and IP amassed for use in the areas where you have products today may be adapted for newer areas just as Apple did when it extended its design prowess and graphics interface products from the Macintosh computer into the smartphone and tablet computing markets.

• The Zero Innovation concept. Pardon the hyperbole, but the concept of "Zero Innovation" is really big. By Frost & Sullivan's calculation, modern society is pushing towards a world of "zero breaches." Governments are asking their citizens -- both corporate and individuals -- to embrace the idea of "zero waste emissions from factories, zero defects, zero breaches of security, zero car emissions, zero crime, and complete recyclability from households."

  This is not some pie-in-the-sky scheme. The European Union is far ahead here, as Anna Young demonstrated in a recent EBN blog. (See: Opportunities & Challenges As Europe Sets New Emission Goals.) Even China is onboard, not because it agrees with the rest of the world that it is a major pollutant, but because curbing emissions makes business sense. Efforts to use fewer resources can even be translated into a growth business, as the Chinese put it. (See: China Asks Industries to Cut Energy Consumption.)

  Some of the above goals may be idealistic and even unrealizable, but nobody is going to be waving a placard advocating anything contrary. Rather, companies are either fully sponsoring or implementing programs towards all the above zeros, especially low-to-zero emissions, or at worst paying lip service to the concept. In order to benefit from the evolutionary process, the different members of the electronics manufacturing community must get fully engaged -- not simply for altruistic reasons but because these developments offer huge sales and profit opportunities.

• Increased infrastructure development. Investments in infrastructure are rising in developing and developed countries worldwide, and the pace of growth is forecast to increase over the next 10 years, according to Frost & Sullivan. First, most developing economies are pouring whatever resources they can spare into infrastructure construction in a bid to catch up with developed countries, which in turn are jacking up spending to overhaul crumbling facilities.

  The amount of money that's expected to be spent on infrastructure construction is staggering. For water generation and distribution alone, Frost & Sullivan projects about $22.61 trillion (yes, trillion) between 2005 and 2030; $9 trillion for power; $7.8 trillion for road and rail projects; and $1.6 trillion on air/seaports, for a combined total of $41.1 trillion.

  By region, Asia/Pacific is forecast to devote the most resources to water and power as well as road and rail projects (I expect China would be the primary spender in Asia/Pacific) followed by Europe and North America. Latin America will also be heavily involved in infrastructure upgrading and development for the next two decades with Africa and the Middle East trailing the rest of the globe.

• More and better healthcare. "If current trends hold, by 2050 health care spending will almost double [and claim] 20 percent to 30 percent of GDP for some economies," the Frost & Sullivan report says. That about sums it up, but the full picture is even more intriguing: Healthcare as a percentage of GDP is soaring worldwide, especially in Europe and North America. Though politicians are interested in shaving this down, I expect the rate of increase to continue as individuals seek ways to live better and longer. These are not goals any government can set itself against, despite the surging costs of lengthening lives in developed economies.

  In the United States, public per capita spending on healthcare in 2007 was approximately 30 percent, a level deemed unsustainable at the time. It still is, but this hasn't resulted in a deceleration; rather, US government spending on healthcare continues to climb, resulting in some ferocious discussions in Congress. We'll leave the government to grapple with policies designed to reduce healthcare spending and focus here on how businesses can develop products that would make achieving those goals easier.

  One such step is a trend towards the shift in spending "away from treating and towards predicting, diagnosing and monitoring," Frost & Sullivan notes. Well, that's good to know, and companies like General Electric Co. (NYSE: GE) are responding with equipment that offers a combination of service accuracy, speed, lower cost, and portability for use especially in cash-strapped developing regions.

  The availability of lower-cost and ultra-portable medical diagnostic equipment will eventually help push diagnosis up to about 27 percent of healthcare spending by 2025 from 15 percent in 2007, according to Frost & Sullivan. During the same period, treatment-related spending will drop to 35 percent from 70 percent while predictive medicine will increase to 22 percent from 5 percent.

The above mega-trends and those discussed in the first part in the series are already driving business activities worldwide, but others are building up under them. Do you already have some inkling into what these might be? Share them with us here, and don't forget to mention the implications for high-tech.