Scenarios for the tech industry after Corona

The pandemic and the resulting measures hit the global economy hard - and are still hitting it. National exit restrictions, travel restrictions and contact bans have led to a drop in infections from mid-April. But a sharp drop in trade and consumption will be with us into the fourth quarter, according to McKinsey. But who will emerge as the "winner" from the pandemic?

 

 

In the short term, providers of e-learning, teleconferencing and cloud computing will certainly benefit the most from the Corona crisis. However, it is clear that there are good recipes from the "technology kitchen" to survive the perhaps still months-long fight against the pandemic reasonably unscathed. On the occasion of the Corona crisis, a team from IT solutions provider Softeq has evaluated which scenarios apply to the tech industry.

The tech industry in the pandemic

The coronavirus has changed the reality of life for consumers and businesses. For the tech industry, which is additionally suffering from the production backlog from China, this has implications:

  • The implementation of 5G in the US and Asia could be delayed by up to 18 months. Without more efficient network infrastructure, ambitious IoT projects with high data usage and edge computing (for example smart cities) are on the brink. On the other hand, it is to be expected that the catch-up effects after the crisis will be just as great and that time can now be used for project preparation.
  • As of April 2020, nearly half of the world's population was in quarantine or self-isolation - this has had and continues to have an impact on internet traffic, if nothing else. Video streaming for news portals, health and emergency services, and businesses must be prioritized. Consumers are feeling the effects: YouTube and Netflix have reduced their video quality.
  • AWS, Microsoft Azure, Google and other cloud computing platforms are finally becoming indispensable in the business and content space. In the coming months, enterprises will be forced to make legacy applications SaaS/PaaS ready. Software developers with skills in microservices and containerization will be in high demand.
  • Before the Corona crisis, around 50% of internet traffic came from mobile devices. However, usage via tablets and laptops is currently on the rise as more people work from home. This could also mean that sales of smartphones and innovative wearables are falling, even though they were all the rage at this year's CES.

Online retail is experiencing an increase in some areas, with the leading platform Amazon in particular benefiting from the Corona crisis due to its broad range and delivery reliability. Admittedly, the boom is not affecting all products: Food, pet food and home electronics are benefiting, while clothes, portable consumer electronics and everything to do with cars are currently slow sellers.

Tech start-ups are particularly affected by the Corona crisis. For one simple reason: investment rounds usually take place every six to eight months. But investors will be very cautious in the near future, cutting back on investments and promoting existing companies rather than start-ups.

Established companies such as Airbnb or Uber are also suffering from the crisis, but they will probably survive this crisis despite the drop in sales as established brands - at least the companies will: Employees, landlords and drivers are being hit hard by the lockdown.

Where the IT sector will feel a boost after Corona Global, schools are currently closed in whole or in part in over 100 countries, according to the UN. Homeschooling is the order of the day - and with it, e-learning platforms are experiencing an unprecedented boom. This is also true for digital education as a whole. Although it is not yet clear whether the trend will continue, there are increasing signs that the education market must and will engage more intensively with e-learning. Other areas:

  • Teleconferencing: Before the outbreak of the Corona crisis, hardly anyone knew Eric Yuan, the founder of Zoom Video Communications. Now his company is more valuable than four American airlines - combined. In Switzerland, many employees still work from home offices - making teleconferencing tools suddenly business-critical for many companies. Analytics platform Sensor Tower writes that applications such as Zoom, Slack, Tencent Meeting as well as Microsoft Teams recorded 6.7 million downloads in the first week of March alone.
  • Virtual Reality and Augmented/Extended Reality: Teleconferencing and task management tools help companies stay (somewhat) productive in these difficult times. In the industrial sector, however, closed production sites are putting the established practice of on-site training to the test. For example, how can industrial workers currently be trained on new machinery? VR is the answer. The badly battered tourism sector could also learn something from the crisis: bring the world home with Extended Reality (XR) - one example is Travel World VR. Cultural institutions like museums are also currently upgrading their capabilities to deliver virtual tours of their collections (and even show more than you can discover walking through the museum).
  • Telemedicine and IoT for Healthcare: It is generally expected that the coronavirus will drive the implementation of e-health - especially when it comes to telemedicine and IoT-based health monitoring. Even in Germany, which is critical of data protection, the voices are growing, but remain quieter by global standards. China, on the other hand, is boldly leading the way, with telecom providers building a 5G-based communications system that connects doctors from West China Hospital and 27 hospitals with Corona patients. The country has equipped police with drones to detect people who don't comply with quarantine orders - by taking their temperature. South Korea was the first country to have an app that monitors self-isolation compliance. But the app also allows users to stay in touch with doctors and other health providers. Australia is using innovative technology in a different way, combating fake news with an AI-driven chatbot. A growing problem is cyberattacks against IT systems of hospitals, which have to abruptly upgrade their IT systems in the pandemic and are not prepared for the security issues that arise in this regard. All in all, the trend suggests that the use of technology in the healthcare industry, for example, to track the outbreak of a virus, will be more widely discussed after the Corona crisis. Countries with less data protection will certainly lead the way in this regard.
  • Delivery Services: FoodBoss shows the ever-growing need for contactless deliveries in the age of Corona. Others are concerned because couriers are not well adapted to the situation, especially hygiene remains a problem. China is using drones to deliver medicines, cutting delivery times in half. DHL is also getting in on the act in this area. This raises hopes that politicians worldwide will follow the example of China, where the use of drones for parcel delivery has been allowed for some time. There are also initial trials in the USA with drug deliveries. According to a study by Roland Berger (before the Corona crisis), parcel delivery is considered the fastest to be implemented area for the use of drones in the private sector.

What's next?

We do not yet know exactly to what extent the Corona crisis will affect the tech industry. However, we have seen that we are dependent on China - both in the supply chains and for the consumption of our products. Apple has already missed its revenue targets in the first quarter of 2020 - what happens next remains uncertain. In Germany, the flagging automotive industry is suffering most, while SAP, a digital conglomerate of sorts, is making its mark. Supply chain disruption is currently the biggest concern across the industrial sector.

IT development services are also affected: Global technology companies that outsource their IT development to Asia are now finding that home offices are very uncommon in India, for example. At the same time, it may currently be more attractive for stumbling companies to outsource rather than hire, only with companies in regions outside Asia that are less affected by the pandemic.

Is there any good news? Yes! Most governments, including here in Europe, are pushing hard against the economic downturn. Technological advances that can help avoid a similar scenario as now are likely to be supported with large investments - from smart city initiatives to platforms that simplify disaster management and help avoid such situations. IoT projects and virtual reality will also be the focus of some industries as they seek to become less dependent on the analog world.

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