How horizontal tech integration is redrawing industry lines

KARACHI: From connected cars that sync seamlessly with mobile phone apps to telecom operators building cloud ecosystems, industries are converging through horizontal tech integration.

In the past, companies focused on creating and perfecting a single type of product. The goal was to dominate a specific market by building a superior, highly specialised item. Now, companies are blurring boundaries to unlock new revenue streams and build consumer loyalty.

“[This new trend] is becoming a necessity,” says Web3 and digital asset consultant Arsalan Khan, “especially at a time when AI and other technologies reach a point where they complement each other. As I like to say, the world is becoming ‘one big software’.”

The economic impact of this adoption is significant. If McKinsey estimates are anything to go by, the Internet of Things (IoT) could enable $5.5 trillion to $12.6 trillion in global economic value by 2030, including value captured by both consumers and businesses.

Industry insiders say the future belongs to firms that can integrate technologies beyond their core and reinvent themselves in the process. Syed Asif Ahmed, a seasoned automotive leader who currently serves as general manager at MG Motors Pakistan, is driving a transformation in Pakistan’s automotive landscape by spearheading the shift towards electric vehicles.

In his conversation with The News, he says that technological disruption is the modern-day equivalent of Noah’s Ark: either get on board or risk being swept away. The pace of innovation leaves little room for hesitation, and those who cling to outdated models may soon find themselves relegated to history.

The scale of integration is vast. According to IBM, the number of connected vehicles worldwide is projected to reach 327 million by 2027.

Horizontal integration of consumer deliverables “lies at the heart of disruptive technologies”, Asif adds, “In today’s tech-driven business landscape, it is no longer optional, it is essential for both growth and survival. Organisations that fail to understand and implement this shift risk becoming obsolete.”

The trend is not limited to one sector. Telecom operators, for example, are no longer just connectivity providers; they are becoming enablers of digital platforms across industries. In July 2024, as Jazz, Pakistan’s leading telecom company, marked its 30th anniversary, the company formally announced its transition to a ServiceCo structure, reorganising from a traditional mobile operator into a forward-leaning conglomerate with specialised strategic business units (SBUs).

In their comments, the Jazz spokesperson talks about its transition, “The telecom industry has traditionally been defined by minutes and gigabytes, but customer needs today extend far beyond connectivity.”

“While mobile services remain the foundation of our business, the real opportunity lies in addressing the digital lifestyle needs of Pakistanis. For us, mobile broadband is only a starting point; it is what people can do with that connectivity that truly transforms lives. Whether it is making online payments, accessing healthcare, learning online or streaming entertainment. With millions of subscribers already connected, Jazz recognised the potential to monetise this base through financial, Insurtech services, entertainment and cloud solutions rather than just connectivity,” the company explains.

“In our context, horizontal integration is expanding across adjacent sectors of the digital economy — fintech, health tech, entertainment, enterprise cloud, gaming — rather than staying confined to connectivity alone. Each of these verticals are powered by our core network, but together they form an interconnected digital ecosystem under the Jazz umbrella. Long-term, this positions us not as a telco, but as a platform company that creates value by enabling multiple aspects of digital living, while remaining asset-light and partnership-driven.”

“We are leveraging our scale, infrastructure, and customer trust to introduce platforms in entertainment (Tamasha), fintech (JazzCash), Insurtech (FikrFree) & B2B digital solutions (Garaj Cloud).”

Why do companies adopt this approach? Per Arsalan, “it is about capturing the network effect. When a telco adds payments, entertainment or cloud services, every new layer strengthens the stickiness of the ecosystem. Similarly, carmakers building software-defined vehicles are no longer competing only on design or horsepower, but on user experience.”

When a customer’s life is deeply integrated with a single company’s services (their car is also their music player and navigation system and their phone plan includes all their entertainment), the cost and inconvenience of switching to a competitor become very high.

At the centre of this change is artificial intelligence (AI). According to PwC’s 2025 Global AI Jobs Barometer released in June, data for the year 2024 shows that industries ‘most exposed’ to AI saw 3x higher growth in revenue per employee (27 per cent) compared to those ‘least exposed’ (9.0 per cent).

Jazz calls AI “the real multiplier”, adding that “while 5G and IoT expand connectivity and data sources, it is AI that turns data into intelligence.”

‘UNIQUE SELLING POINT’

When multiple brands adopt the same technology, say, a shared EV platform or Android Automotive OS, a question arises: how do companies maintain product differentiation without losing the cost and speed benefits of integration?

On this, Asif explains: “Unique selling propositions (USPs) or product differentiation strategies should not be confused with enabling technologies such as Bluetooth, Qi wireless charging or NFC. These technologies serve as foundational enablers, not as sources of competitive distinction.”

“A classic example is the quartz watch. Both Breitling and Casio utilize quartz crystals for their piezoelectric properties, which enable precise timekeeping. However, they differentiate themselves through design, craftsmanship, brand positioning and pricing — targeting entirely different consumer segments. In this case, quartz is merely the enabler; the value lies in how each brand builds around it.”

According to Asif, tech companies often pursue monopolistic positions to maximise short-term financial gains. This drive stems from an internal recognition that technological advantages are fleeting in a highly competitive and innovative landscape.

Just as KOMATSU emerged to challenge CATERPILLAR, new players will inevitably rise to disrupt current leaders, he shares. The most sustainable strategy is to focus on differentiation through design, user experience, and brand association, while leveraging common enabling technologies. This approach not only reduces costs but also accelerates market adoption and broadens consumer reach.

Jazz shares similar sentiments. When asked what differentiates its strategy from many telecoms globally that are pivoting towards digital ecosystems, Group Chief Corporate and Regulatory Officer at Jazz Zaheer Mehdi said that unlike that of many global peers, “our approach is rooted in inclusivity and accessibility. We are building homegrown platforms tailored to Pakistan’s socio-economic realities.’

He adds that “our work on Pakistan’s indigenous large language model (LLM) builds technology that understands our culture and context. This local-first approach, combined with our reach and partnerships, gives Jazz a distinctive edge in shaping Pakistan’s digital future.”

CHALLENGES AHEAD

Tech integration is not a plug-in that companies can use for scaling. It comes with its set of challenges. In the context of the auto sector, for example, how do automakers manage the risk of over-reliance on external partners for core innovations?

Asif provides his point of view: “Automakers adopt varying strategies to mitigate the risk of over-reliance on external partners. Toyota, for instance, is not typically seen as a core innovator but excels in refining and perfecting mature technologies. A notable example is its implementation of the Continuously Variable Transmission (CVT) in the Corolla Grande — once considered an engineering challenge. While most CVT components were outsourced, Toyota retained control over the steel belt, ensuring its hallmark standards of quality, durability and reliability (QDR) remained intact.”

However, the shift towards horizontal technological integration introduces hidden risks. Many champions of vertical integration in the 20th century — such as Kodak and Nokia — failed to adapt to disruptive innovations and lost their market dominance, he adds. Kodak’s expertise in film-based photography and Nokia’s pioneering role in mobile telephony (including contributions to GSM, 3G, and LTE) were not enough to shield them from the smartphone revolution.

This pattern suggests that today’s automotive giants could face similar disruption from tech companies. For future consumers, QDR will become a baseline expectation, while human-machine interface (HMI) and digital experiences will take precedence.

As a result, traditional automakers may find themselves relegated to the role of component suppliers — providing parts like suspensions and seats to tech-driven mobility platforms. Early signs of this shift are evident in vehicles like the Xiaomi SU7 and Huawei Aito, which represent the beginning of a new era in automotive innovation.

But this also results in the competitive landscape evolving as tech giants, fintech and startups all chase similar opportunities. On this, Mehdi says: “Pakistan’s telecom market is consolidating, but competition is not disappearing; it is shifting. While fewer operators remain, we now face an expanding field of fintechs, cloud providers and digital platforms — each bringing agility, scale or innovation.”

“Jazz is evolving into a digital operator with connectivity at the core and a clear ambition to become a ServiceCo. We combine nationwide reach with digital agility and the trust of a household brand. Our purpose is to be an equaliser — widening access, breaking barriers and enabling growth through collaboration,” he explains, adding that the future belongs to ecosystems, not silos.

The integration brings growth and improves productivity, but “the challenge, of course, is execution”, according to Arsalan.

True horizontal integration requires deep investment in infrastructure, partnerships, and governance to make these new layers work together. But when done right, it transforms companies from product providers into platforms. And being a platform means infinite scalability, he adds.