Report Signals 'Convergence Era'
A new industry trends report highlights the rise of a "convergence era" where traditional sector boundaries are dissolving. Driven by digital transformation, the trend is forcing novel partnerships, such as automotive firms working with tech giants on autonomous vehicles and retail brands integrating fintech solutions.
While the concept isn't new, digitalization is accelerating the pace of industry convergence exponentially. This trend is forcing legacy companies to adopt new investment models, shifting from solely acquiring or inventing to also "scouting" for emerging technologies and "harvesting" internal assets for new markets to avoid obsolescence. This blurring of industry lines is creating entirely new hybrid sectors like "healthtech," "fintech," and "edtech." For example, collaborations between healthcare providers and tech companies are developing AI-powered diagnostic tools, with some hospitals reducing diagnosis times by up to 40%. Strategic partnerships are becoming crucial for innovation and market access. The collaboration between Tesla and Panasonic was pivotal in advancing electric vehicle battery technology, reportedly cutting battery costs by over 30%. Similarly, Ford partnered with Google to leverage cloud technology for connected vehicle data. The integration of 5G and the Internet of Things (IoT) through partnerships between telecommunications and manufacturing sectors is creating smart factories. This OT-IT (Operational and Information Technologies) convergence allows for real-time data analysis from network-connected machinery, boosting efficiency and enabling predictive maintenance. This trend extends beyond just technology and manufacturing. In Africa, the convergence of telecom and financial services has proven highly lucrative; in the first half of 2020, MTN's fintech business generated R6.1 billion in revenue. In Nigeria, by 2017, nearly 80% of media and entertainment revenue came from players who had converged with tech companies. Looking forward, the World Economic Forum, in collaboration with Capgemini, highlights the compounding effects of combining technologies like AI, quantum computing, and biotechnology. Their "3C Framework" outlines a process of combination (integrating technologies), convergence (restructuring value chains), and compounding (creating network effects) that will define future innovation.
