Decoding Tech Trends and Leadership in the Digital Age

The Digital Automobile

"The convergence of tech and automotive industries is revolutionizing the sector, with cross-industry partnerships driving the shift towards software-defined vehicles. However, according to an EY study, over half of these partnerships in the automotive industry fail. While cross-industry partnerships have enormous potential for creating new value, they also bring significant challenges that must be overcome for success. Achieving this requires a shared vision, clear responsibilities, and effective governance mechanisms and resources."

Jutta Menzenbach
Managing Partner, Germany
Global Practice Co-Leader, Industrial Practice
Global Sector Leader, Automotive

• The automotive sector is undergoing rapid transformation, driven by innovations in electric and autonomous vehicles and new OEMs reshaping the consumer experience, engineering, and manufacturing. This intelligent future promises sustainability, safety, comfort, and connectivity.
• The overall automotive software and electronics market is projected to grow to nearly US$660 billion by 2030, more than double the current size of U$320 billion and is forecast to exceed US$1 trillion by 2035.
• The software and electronics consumer segment, i.e. revenues from software-based services marketed to end consumers, will represent 15% of the general automotive consumer market. A disproportionate share of market growth will come from applications and the smart mobility system.
• The concept of a ‘mobile on wheels’ is not new, with cars increasingly becoming high-powered computers. At CES 2024, LG showcased its ‘smartphone on wheels’ concept, highlighting this trend. GenAI for ChatGPT-powered in-car voice assistants, presented by BMW, Mercedes, and VW, demonstrated the potential to personalize in-car experiences and build brand loyalty, though OEMs must prioritize safety in implementation.
• The in-car digital experience is becoming a key differentiator, potentially surpassing exterior style and performance. EV adoption, promoting re-charge breaks, offers opportunities for in-car gaming and entertainment, as seen with Sony and Honda’s Alfeela car. This trend is likely to spur further innovation in digital services within vehicles.
• The quiet nature of EVs enhances the audio experience, providing a competitive edge through customized and differentiated audio offerings. OEMs need to determine if high-quality digital services will become standard expectations or remain key differentiators in buying decisions.
• The strengthening relationship between consumer electronics and automotive companies is evident in the collaborations and innovations from brands like Sony, LG, and Samsung, which add value through high-quality screens, cameras, and user interfaces. Companies such as Panasonic and LG are integrating their technologies into vehicles, contributing to modern software-defined vehicle architecture.
• Technology is blurring industry lines, as seen with Ford and Baidu’s partnership in 2018, and Foxconn, the manufacturer of Apple’s iPhone, now partnering in the automotive industry. Tech companies like Xiaomi and Huawei have also unveiled their first vehicles, showcasing this trend.
• As the ecosystem expands, it will be essential to secure future business with the right partners. The rapid pace and variety of developments are too much for automotive companies to manage alone. Hyper-scalers such as AWS, Microsoft Azure, and Google Cloud have become key enablers in the transition to software-defined vehicles, supporting digital in-car infotainment options. Chip makers will also play a critical role.
• Digital twins are revolutionizing the automotive industry by providing virtual replicas for simulation across design elements like aerodynamics, battery efficiency, and structural integrity. This reduces time, resources, and costs in the production cycle, ensuring expectations are met before physical prototypes are built. These technologies also enhance EV production, testing, performance, safety, maintenance, and efficiency, crucially influencing key buying decisions centered around efficiency and supporting the development of autonomous driving.
• According to Statista, the market value of digital twins in automobiles is forecast to reach US$5 billion by 2025, making automotive the third-largest digital twin market after manufacturing and aviation.
• Competition in the automotive industry has intensified with breakthroughs in software and electronics. Reports from the Shanghai Auto Show in 2023 revealed that Chinese OEMs and their supplier ecosystems have surpassed Western counterparts in speed, quality, price, and functionality. Chinese startups are innovating faster due to their capabilities in electrical/electronic architectures and software.
• Western participants in the automotive ecosystem must explore strategic collaborations, particularly co-opetition, combining tech capabilities with automotive assets. Many anticipate a surge in new partnerships and supplier deals, especially between auto and tech companies. The adoption of consumer-facing technologies is expected to contribute US$248 billion to the predicted US$660 billion value of the automotive software and electronics market by 2030.
• Read more on the topic:
  Whatfix: Digital Transformation in the Automotive Industry
  BCG: Where Will Software Drive the Auto Industry Next?
  Toobler: The Role of Digital Twin in the Automotive Industry in 2024
  Capgemini: Five Top Trends from CES that will Drive the Automotive Industry in 2024

The Metaverse

“Is the Metaverse more akin to Elvis, Disney World and Star Trek that changed our culture, or more like the, telephone, mainframe computer and video conferencing that changed our way of work, or like the PC, iPhone and EVs, which are changing both.

The story is yet to be written but odds are the journey will be tumultuous, meandering, eventful and exciting – maybe all at the same time.  Stay tuned as we all live it and learn.”  

Rick Wargo
Partner, U.S.
Global Practice Leader, Technology Practice

• Theorist, venture capitalist and author of The Metaverse Matthew Ball defines the ‘metaverse’ as “a persistent and interconnected network of 3D virtual worlds that will eventually serve as the gateway to most online experiences, and also underpin much of the physical world”.
• How much do we really understand or knowingly engage in the Metaverse? And are we all roughly at the same point on the continuum, or are others reaching galaxies far, far away that we don’t know about?
• The metaverse delivers the convergence of physical and virtual space accessed through computers and enabled by immersive technologies such as virtual reality (VR), augmented reality (AR) and mixed reality.
• Today’s most notable manifestation of the Metaverse appears in Apple’s Vision Pro and the less expensive Meta Quest 3; both are VR headsets with mixed reality capabilities that use external cameras to display a pass-through of the real world into the VR headset, blending  the virtual with the real. While Meta Quest 3 tends to be noted by reviewers for gaming and fitness, the Apple Vision Pro tends to be noted more for work and videos.
• The promise and attraction of the metaverse was that VR and AR technologies could seamlessly integrate, creating a more immersive and interactive online experience. It promised to be a place where users could socialise, work, learn, shop, create and explore in ways not possible on traditional devices.
• However, the all-encompassing concept of the metaverse is losing its previous allure, with participants focusing more on a collection of technologies that enable distinctively enhanced digital experiences. Organisations pursuing ‘metaverse investments’ are eschewing the metaverse utopia in favour of specific use cases enabled by metaverse technologies, prioritising user-centric value.
• What sort of use cases? From a B2B perspective, potential value creation can be understood through three broad metaverse categories; industrial, social and enterprise:
• • Industrial: simulations of complex systems with the experiential metaverse layer on top, most notably digital twin technology, which is predominantly associated with the industrial metaverse although medical training is also applicable here;
  • Social: an extension of social media integrating immersive tech such as VR and AR applications, this category includes multiplayer online gaming and community-building platforms, social and creator spaces; and,
  • Enterprise: organisations will use immersive technology to enhance productivity, connect with customers and provide learning platforms, for instance, new employee onboarding and immersive online meetings.
• In B2C trials, concert promoters, art fairs and businesses shifted in-person events to the metaverse to experiment with the technology and replace physical connections lost during the pandemic. However, expectations were not met and the limitations of a nascent technology left the glass half-empty. Technological bottlenecks, fragmentation of virtual spaces and increasing concerns around privacy and security coalesced to question the metaverse’s potential.
• However, given its immersive capabilities, the metaverse is gaining traction among some businesses and service providers, most notably around employee experience, customer experience and digital twins. The metaverse is not simply a destination; it comprises metaverse technologies that form the foundation of a new immersive customer and end user experience. Such services are integrating seamlessly into larger enterprise operations, underscoring the potential for the metaverse in the business world.
• Examples of leveraging metaverse technologies in the business environment include:
• • Bringing the annual Venice Carnival to the metaverse for global participation;
  • Futureproofing the HR function: GlaxoSmithKline optimised metaverse technologies to address the pain points through the employee life-cycle;
  • State-of-the-art health care through exceptional customer relationship management, including the tracking and recording of patient interactions in an evolving system.
• Overall, current use cases of the metaverse are primarily: gaming; virtual events; immersive entertainment; training; nextgen education; real-time virtual expert assistance; augmented life; virtual tourism; digital socialising; simulation; better collaboration; more efficient R&D, design and prototyping; and new retail experiences.
• The transformative potential of the metaverse is currently limited by reticence among CEOs to fully embrace the end vision. They prefer near-term, simpler use cases and proven technologies such as blockchain (enabling the use of cryptocurrencies, smart contracts and NFTs) and augmented or virtual reality.
• Transformative technologies take time to mature. Read-only content in Web1 gave way to interactive multimedia in Web2, which will give way to immersion in Web3. Typically, early fervour and excitement are followed by recalibration; businesses this time will focus on trust, balancing privacy and identity against vast improvements in efficiency, innovation and safety across the industrial landscape, powered by AR, VR, CAD and IoT.
• Nevertheless, McKinsey squarely positions the metaverse as a ‘CEO issue’ primarily due to scale and its value as a combinatory technology, combining AI, immersive reality, advanced connectivity and Web3. The metaverse also touches on multiple areas in the organisation, with CEOs the natural integrators.
• In a McKinsey survey, 61% of business leaders expect the metaverse to change the way their industry operates. The firm estimates that the metaverse could generate US$4 to US$5 trillion in value across consumer and enterprise use cases by 2030.
• As a whole, Statista values the metaverse market at over US$74 billion in 2024 and predicts an annual growth rate of 38%, extending its value to over US$507 billion by 2030.
• Read more on the topic: 
  TechTarget: What is the Metaverse?
  EY: Navigating Beyond the Hype: The Metaverse, Take Two
  PwC: Metaverse: Creating Value for Enterprise and Society
  Wired: What is the Metaverse Exactly?
  Science Direct: Blockchain for the Metaverse: A Review
  McKinsey: A CEO’s Guide to the Metaverse
   

Quantum Computing

“Some believe the automobile replaced the horse and buggy.  It did not.  It replaced living your whole life within 50 miles of where you were born.

Some believe the electric light bulb replaced the gas lamp.  It did not.  It replaced going to sleep with the chickens when it gets dark.

Some believe the microchip replaced mainframes and punched cards,  It did not. It replaced the need for people to travel to technology versus having technology travel with them.

What will Quantum Computing replace?” … Inquiring minds want to know.”

Rick Wargo
Partner, U.S.
Global Practice Leader, Technology Practice

• McKinsey describes quantum computing as “a new approach to calculation that uses principles of fundamental physics to solve extremely complex problems very quickly”; the firm explains, “quantum computers have the potential to solve very complex statistical problems that are beyond the limits of today’s computers”.
• Classical physics explains what occurs at a macroscopic level (for example, throwing a ball or pushing a car); however, a new set of rules and ideas, quantum theory, is required to deal with things that occur at the subatomic level.  Quantum bits, or qubits, allow these subatomic particles to exist in more than one state at the same time, rather than the binary state (zero and one) of classical computers.
• Different types of quantum computers use different physical systems to implement qubits and quantum operations: light particles (photonic quantum computers), charged atoms (trapped ions), individual electrons (such as silicon or germanium), superconducting circuits (loops of metal) and more. As yet, there is no dominant system in terms of performance and scalability; each has its own advantages and disadvantages. Nevertheless, Dutch start-up Quix hails its recent breakthrough in photonics-based quantum computing as a precursor to building a scalable universal quantum computer. Such breakthroughs have changed the quantum innovation cycle from 10 years to just one year.
• Whichever system or systems prevail, quantum computing, one of three main areas of emerging quantum technology (the others being quantum communication and quantum sensing), could be valued at nearly US$1.3 trillion by 2035.
• The potential for economic advantage has prompted significant investment. As of 2022, according to McKinsey, China’s officially acknowledged level of government investment in quantum technology is US$15.3 billion, surpassing the European Union at US$7.2 billion, the US at US$1.9 billion and Japan at US$1.8 billion.
• Governments and corporations are attracted to the massive computation power that promises disruption in fields such as cryptosecurity, national defence systems, machine learning and AI. Investment in the technology is robust, driven not only by opportunity, but also the need to limit risk as quantum computing has the potential to decrypt messages and databases belonging to states and banks.
• Technological hurdles mean quantum computing is a long way from state, commercial, and military use. That said, quantum sensors are already in use by the British military for precise positioning of ships, using the earth’s magnetic field, rather than satellite navigation, which is vulnerable to interference as illustrated by the crashing of Russian drones in Ukraine due to GPS spoofing.
• At the organisational level, quantum computing’s ‘million-fold’ increase in efficiency compared to classical computers has led to significant advances in  superior data analysis and modelling, allowing fintech companies to analyse enormous datasets in real-time, enhancing data modelling, risk analysis and financial predictions. 
• More broadly in finance, the Quantum Financial System (QFS) has emerged as a trending, but still theoretical, transformative force, which is expected to leverage  quantum computing and cryptography to redefine security, efficiency and performance.
• • Quantum machine learning algorithms analyse large volumes of financial data more effectively, improving pattern recognition, fraud detection and market forecasting. This will enable financial institutions to more accurately identify trends and opportunities.
  • Analysing large areas of unstructured data will enable banks to make financial predictions or simulate investment portfolios, leading to greater understanding of financial markets and boom & bust cycles, as well as management of asset allocation.
  • Quantum banking could potentially help Chief Risk Officers to address the complex risk landscape, particularly how risks intersect with each other to create potential points of failure even when traditional risk management metrics appear stable. This is particularly appealing for cyber-risk, and on the horizon of a struggling economy, credit risk.  
  • With banks facing issues of scalability, cost, maintenance, legacy technology and regulatory scrutiny, quantum computing could provide a significant advantage for early movers. However, experts forecast the commercialised use of quantum computing to be about a decade away.
• Looking towards this horizon, according to Deloitte global spending on quantum computing is forecast to grow from US$80 million in 2022 to US$19 billion in 2032, with a CAGR of 72%. McKinsey predicts the value generated by quantum computing in finance could reach up to US$1.3 trillion by 2035.
• • Collaborations include IBM Quantum partnering with finance houses JP Morgan Chase, Barclays, Goldman Sachs and Wells Fargo to explore quantum solutions for portfolio optimisation, risk management, fraud detection and pricing.
• • Start-up BlueQubit is a quantum financial system (QFS) specialist providing quantum computing simulators powered by NVIDIA. Users experiment with and test quantum algorithms using BlueQubit’s Quantum SaaS platform.
• • The IMF has published policy recommendations and suggestions for future research into the implications of the QFS on the global economy and financial system. Their output highlights the benefits of accelerated financial modelling, improved data security and enhanced privacy, as well as risks around increased cyber threats and regulatory complexities.
• Beyond financial services, quantum computing promises to make every day work easier and improve quality of life. For example: enhancing health and life span prediction; creation of new materials; solutions analysis; drug discovery; mental health monitoring; weather forecasting; data encryption; climate modelling; genomic data analysis; financial risk management; traffic management; disaster prediction and response; energy management and supply chain management.
• ‘Quantum supremacy’ (over classical computers) may also play a major role in sustainability. While the energy requirements of computational processes are skyrocketing, a “quantum energy advantage” has been discovered by BTQ research. Their quantum proof-of-work (QPoW) algorithm indicates that leveraging quantum computing for blockchain technology, redefines and significantly reduces energy requirements.
• To live up to their potential, quantum computers require careful handling in precise environments: almost no atmospheric pressure, an ambient temperature close to absolute zero (-273°C) and insulation from the earth’s magnetic field to prevent the atoms from moving, colliding with each other, or interacting with the environment (not unlike the supercomputer in Dan Brown’s Origin).
• There has been extensive learning on both sides: for the data centre the use of liquid nitrogen, helium and hydrogen; and for the quantum computer team weight limitations, door sizes, noise and interference; and which team does what, among many other elements.
• Will there be enough, and the right kind of data centres therefore to accommodate quantum computers? Oxford Quantum Circuits (OQC) claims to have developed the playbook for putting a superconducting computer into a data centre anywhere in the world. The company has deployed six of its systems in two colocation data centres in the UK and Japan (in colocation customers rent equipment, space and bandwidth, and the colocation facilities provide space, power, cooling and physical security for the server, storage and networking equipment, connecting the telecoms and network service providers).
• Read more on the topic:  
  IP Quarterly: The New Quantum Technology Race
  McKinsey: What is Quantum Computing?   
  Iberdrola: Quantum Computing and Supercomputers will Revolutionise Technology
  Deloitte: Quantum Computing in Financial Services
  CMR Berkeley: Quantum Computing and the Business Transformation Journey
  Forbes: 14 Business and Social Challenges Quantum Computing Could Impact
  LinkedIn Pulse: The Quantum Financial System (QFS)
  Fintech Magazine: How Quantum Computing Could Transform the Banking Sector
  The Quantum Insider: BTQ Research Sees a Quantum Energy Advantage for Blockchain
  Data Center Dynamics: When Data Centres Meet Quantum Computers

Quick links to next sections of Boyden Technology Report:

> Section 4: Talent Trends and Leadership Solution in a Digital Age