Estimated reading time: 3 minutes
The high technology industry is leading the way in an era of transformation that experiences a century’s worth of progress crammed into every decade. It is the catalyst driving innovation across every industry from agriculture to utilities. New generations of technology have continuously evolved supported by a healthy venture capital market willing to take the risk. Now, the industry is becoming polarized by leading platform players from mobile, cloud, social, and smart connected devices.
Digital-born natives, such as Amazon, Facebook, and Google, have changed the rules of the game for all high technology companies. Using digital platforms, global scale, and evolving ecosystems, these companies are bypassing competitive barriers, such as proprietary devices and licensed-based software, and storming established markets with new offerings. Today, seven of the 10 most-valuable companies globally are technology leaders based on a platform business model with digital communities and marketplaces. Platforms represent a big change in the way the industry is organized.
According to McKinsey, more than 30 percent of global economic activity—some US$60 trillion—could be mediated by digital platforms before 2025.1 To be successful, high technology companies must either lead a platform or tie their products to a leading platform.
Today’s major shift in innovation will continue to accelerate into 2025. Powerful factors, such as the rapid rise of the cloud, 5G networks, blockchain, artificial intelligence (AI), and machine learning, are all converging. These disruptive, digital waves will require technology companies to fundamentally transform their products and business models. The high technology industry is poised to play a unique role in this innovation shift—not just as an enabler of digital transformation—but also as a potential disrupter of all industries.
As the high technology industry has empowered consumers, businesses, and governments with new, digital capabilities leveraging cloud, mobile, and social, it has radically changed not only how customers buy technology, but also their expectation for the experience and outcomes delivered. For example, look how technology company Spotify has altered the way that music is consumed. The focus has shifted from purchasing your own personal music collection to being able to listen and easily share experiences through millions of songs and podcasts. It is technology that created the opportunity for companies to deliver better experiences, and as a result, created an outcome-based economy where customers no longer focus on buying technology products. They buy outcomes.
As the industry evolves, new challenges and opportunities are pushing high technology companies to reinvent their products, business models and processes, and engagement tactics with customers, partners, and their entire ecosystem. To thrive in the future, successful high technology companies will build their businesses around their customers—with an ability to continuously respond and adapt to changing needs—by creating a digitally connected enterprise that uses data to turn insight into action across the business in real time.
In a recent Ovum study, nearly 80% of the 200 high-tech marketers surveyed said they are looking to improve the quality of their customer experiences over the coming year.2
In this industry point of view, we will explore the drivers behind the high technology industry’s digital transformation from the shift in innovation to evolving customer expectations to the changing industry landscape.