Global Mega-Trends & Implications for High-Tech, Part 1

You would have to be buried in an underground cave not to know that major changes are occurring in the world today. Societies are being reformed in positive and sometimes in less-positive ways; countries are fracturing, with new ones emerging and old boundaries fading; while technology developments are reshaping businesses and turning many of our old ways on their heads.

For EBN readers, the social impact of the changes occurring around us, which research firm {complink 9171|Frost & Sullivan} has described as “Mega Trends,” are as important as the most-closely held strategic initiatives, new product plans, or other go-to-market plans. This is because these trends are influencing many of the decisions being made by individuals, corporate entities, organizations, and governments, thereby seriously affecting your company's ability to make profits and retain or gain market share.

Before launching into what these trends are and why you should take time to reflect upon them, here's a definition of what constitutes mega-trends, according to Frost & Sullivan:

    Mega Trends are global, sustained and macro-economic forces of development that impact business, economy, society, cultures and personal lives thereby defining our future world and its increasing pace of change.

Have I already noted that these mega-trends will shape our future? Well, let me restate it in another way. At the beginning of this century a number of mega-trends were identified as transformative forces for the next decade. While their impacts are still playing out in our world today, it's clear the companies that took notice of them and exploited them are making bucket-loads of profits today, while those that failed to quickly explore the implications for their businesses are struggling.

Among the trends from 2000 were:

  • China as an emerging superpower. China had displaced Japan to become the world's second-biggest economy. How long before it becomes No. 1 is now a field of study amongst economists.
  • Internet retail and e-commerce. Google is still King of the Hill, but Facebook, Baidu, and several startups are gearing up to snatch its crown.
  • Shift from an industrial to an information society. If you only make widgets today, you are in the commodity business. Apple still makes widgets, but they talk, sing, play, and mesmerize the user with hundreds of thousands of apps
  • Outsourcing as a business model. This needs no further explanation.

I hope I've set the stage for why I believe it's important to pay close attention to Frost & Sullivan's mega-trends. Here is the first batch. I will focus on another set in a follow-up:

  • Development of mega-cities, regions, and corridors.
  • Frost & Sullivan believes we will see the emergence over the next 10 years of additional mega-cities with populations exceeding 10 million. In other localities, though, mega-regions will emerge from the combination of suburbs to form huge metropolises numbering 15 million or more. The mega-cities and mega-regions will be linked by mega-corridors, such as the Hong Kong/Shenzhen/Guangzhou region of China, with populations exceeding 120 million. Naturally, all these mega-cities, regions, and corridors will need transportation and other infrastructure, including high-tech communication services and products.

  • Smart (green) cities replaced by smart (total) concepts.
  • Companies, individuals, and governments are moving on from the implementation of “green” or environmentally friendly ideas and products to the concept of doing everything in a totally “smart” way. This would involve being conservative and more effective in city planning, family planning, construction, energy use, and mobility and result in the creation of smart cities, “more than 50 percent of which will be from Europe and North America,” according to Frost & Sullivan. China and India will “see over 50 new sustainable cities,” the research firm predicts.

  • Smart market opportunity.
  • The convergence of technology is likely to result in the “convergence of competition,” according to Frost & Sullivan. In this scenario, companies will most likely collaborate to win customer attention and will encroach onto each other's turfs, sparking new rivalry even amongst current business partners. This is already happening, as in the case of Apple and Google, each of which has transformed its business to make them rivals in the mobile operating platform area. The ferocity of the rivalry between the two companies has eclipsed the fact Eric Schmidt, who was Google's CEO until recently, was once on Apple's board of directors.

    Companies that will be affected by the concept of “smart market opportunity” are currently involved in IP networks, digital technology, analysis software, wireless communication, network security, power electronics, renewable energy, automation, demand-side management, connectivity of devices, monitoring and sensing, as well as smart grid integration. Players in these areas include Areva, ABB, GE, Siemens, IBM, SAP, Cisco, Google, Oracle, Microsoft, Rockwell Automation, Honeywell, Schneider Electric, and Johnson Controls.

    The extent of cooperation and rivalry that will develop among these companies will only become apparent over the next few years, but the seedlings are already evident in the relationship, for instance, between companies like Google and Microsoft, which started their rivalry in one segment — search engines — and then extended it to the mobile communications space.

  • E-mobility.
  • This is not about mobile communication but more about mobile transportation. Frost & Sullivan believes “over 40 million electric 2-wheelers and 4-wheelers will be sold annually around the globe in 2020.” This means in the next decades, companies supplying components into the mobile transportation market could see surging demand for their products. Potential players in this area include Sanyo, Smith Newton, and electric utilities, charging station developers, systems and battery manufacturers, and system integrators. Companies involved in telematics and other value-added services, including semiconductor vendors offering power management products, are also potential beneficiaries of this emerging global mega-trend.

  • Geo-socialization.
  • This is already happening, but the movement towards mass socialization is bound to accelerate in the next years with sites like Facebook ending up as the first-movers in a global trend. Services and products used in geo-socialization will be offered by companies involved in a wide range of industries, including diverse sectors like restaurants, marketing, networking, real estate, and transportation.

    To benefit from this mega-trend, manufacturers and service providers will need to target their products to serve four distinct sub-trends. These, according to Frost & Sullivan, include personalization and individualization (social networking profiles and personalized products); techno savviness and 24×7 connectivity (gaming gizmos, smart phones, microblogs); civic and environmental concerns (eco-transport, paper bags instead of plastic, paperless banking); and demanding and impatient users (instant text messaging, instant chat, and speed-oriented gaming).

In the concluding part of this blog, I will focus on the other mega-trends identified by Frost & Sullivan. These include: reverse brain drain from developed to developing countries; new technology developments such as proliferation of satellites for multiple innovative applications; information warfare among nations and companies; robotic technology applications; the virtual world; and innovation strategies.

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