Effects of COVID-19 on the Tech World

The effect of the COVID-19 pandemic on human life has been a terrible one. As the death toll swept through the world, major cities have became ghost towns due to lockdown directives. Health centres have had to be re-purposed to find a way around saving lives. Meanwhile, governments have had to dig deep to find stimulus packages for collapsing businesses and also for people out of work. In the tech sector, shutdowns and low capacities have become the norm.

The effect of COVID-19 on the tech world hasn’t been straightforward. So far, the big winners have been firms that provide services that make work-from-home possible. E-commerce giants that provide essential items have seen an uptick in performance, while others, like telecommunication networks, have had to find creative ways around meeting surges in demand.

Remote Work

The effect of coronavirus on businesses in general has been clear to see. With lockdown directives in play, businesses have had to institute remote work policies to avoid large congregations. One of the biggest winners in this era has been Zoom. Zoom provides teleconferencing applications for families and businesses. Unlike many other videoconferencing tools, Zoom’s affordability and free-to-use options have been welcomed by many. The app currently allows its free users to have 40-minute conference calls with 100 attendees at any given time. Daily users increased by 1900% from 10 million to 200 million despite cybersecurity concerns.

Microsoft Teams also experienced a significant jump, reaching 44 million daily users in March. Slack and Teamviewer have both also experienced spikes in usage as businesses and entrepreneurs collaborate online more than they used to. These remote work applications have provided a near-seamless transition for businesses, ensuring business continuity at a time of much concern.

Home Edutainment

As more and more people stay home, their demand for entertainment shifts from outdoor and communal activities like concerts to streaming sites like YouTube and Netflix. Netflix alone has drawn in 16 million new subscribers, raising the streaming giant’s overall subscriber count to about 160 million worldwide; constituting an 11% growth in its subscriber-base.

Streaming

Music streaming sites have experienced and continue to experience mixed effects. On the one hand, Spotify has hit 130 million paying subscribers while listenership has increased by 50% during the lockdown. On the other hand, ad revenues are drying up as companies cut back on spending due to liquidity challenges from an uncertain future.

Meanwhile, Disney+ which launched in 2020, has seen an increase of more than 20 million subscribers. With 55 million overall users, Disney+ remains Netflix’s closest competitor. Both firms have a head start especially for this year as they already have content in place for the rest of the year. This means there will be little to no delays in production for titles scheduled for late 2020.

While some of the old players have enjoyed stellar growth during the pandemic, newbies like Quibi have seen their stocks fall because of it. The mobile-first streaming site which features short-form films enjoyed a stellar launch, but the wheels have started to come off within a short while. “I attribute everything that has gone wrong to coronavirus,” Quibi founder Jeffrey Katzenberg said in an interview about the slow pace of downloads despite a 90-day free period. Quibi was designed as an on-the-fly streaming app, one where you enjoyed content on the bus. With people stuck at home, there is no catching-up to do especially when competitors like Netflix can be watched on home gadgets like TVs. The lockdown has obviously been a major stumbling block towards its development.

Gaming

In the same vein, gaming has become even more popular among stay-at-home families. Both the young and the old have found better ways of mitigating the effects of coronavirus on normal routines. In addition to old games seeing a boost in numbers, new games that reflect the COVID-19 reality have seen a surge. While some have faced backlash for negatively using Chinese colours, others, like Animal Crossing, have seen record numbers on the Nintendo Switch. Generally, the effect of COVID-19 on gaming has been positive on consoles and on online platforms.

Education

The effect of COVID-19 pandemic on education has been damning especially in developing economies like Ghana’s, according to Al-Jazeera. Poor internet connectivity and lack of equipment are some of the factors affecting the use of e-learning platforms.

That notwithstanding, educational institutions have moved their courses online. In their bids to support and to take advantage of the needs in these times, some telecoms operators like Vodafone have teamed up with e-learning platforms to provide courses to their subscribers.

Globally, education technology looks set to continue its march as investors continue to pour resources into online platforms. Some edtechs like BYJU’s have made their courses freely accessible to learners, leading to a more than 200% increase in new users. Tencent Classroom also enjoyed a boost in patronage following lockdown in Wuhan.

Cybersecurity and Cloud Computing

In addition to all the problems with supply-side economics, the Covid-19 pandemic has proven to be a haven for cybercriminals as well. The reliance on online business has made digital information more readily available than before. While this has been a headache for businesses and has caused PR nightmares for the likes of Zoom, tech security firms will find a wealth of opportunities during these trying times.

The same applies for software and cloud computing firms. As more firms and employees engage in remote work, they require online real estate to host their services and applications. Businesses that can combine availability and affordability while mitigating latency effects have benefited and continue to do so. As a result, Deloitte predicts “continued demand for cloud infrastructure services, and potential increases in spending on specialised software. Forecasts also anticipate increased demand for communications equipment and telecom services as organisations encourage employees to work from home, and schools move to online classes.”

Mobility-sharing

Because families are staying at home more often than not, mobility sharing platforms have seen a dent in their earnings. So much so that some firms are furloughing staff while others are closing down entire international operations. Electric scooters, for example, are disappearing from streets in cities across the world. Lime has suspended services in more than 20 countries around the round. Uber-owned Jump is pulling out of Sacramento while others, like Lyft, are facing the brunt of sluggish production in China.

Meanwhile, Uber has had to cut down nearly 4,000 jobs due to a slump, the BBC has reported. The cut is costing the ride-hailing firm about $20 million in severance pay. Lyft has also seen a 70% reduction in trips due to lockdown in all US cities.

Manufacturing

Manufacturing has been among the hardest hit due to shelter-down directives across the world. Where the lockdown has been partially lifted, mandatory social distancing rules mean factories can barely operate at full capacity, thereby imposing inflationary risks on the supply side of businesses. As a result, Deloitte expects smartphone manufacturers to suffer shrinking revenue not only due to lower demand but also because factories in Asia are not at full capacity.

A similar shortage in parts would mean the semiconductor industry’s sufferings will snowball into larger delays in other sectors that rely on these parts for their devices like TVs, laptops, and other gadgets.

The automobile industry, one of the most important sectors of the global economy due to the number of jobs it creates and the mobility services it offers, has suffered from multiple factors related to the Covid-19 pandemic. For starters, car manufacturing plants face the same capacity-problem associated with abiding by social distancing protocols. Secondly, a lack of parts due to freezing productions in the value chain limits output. Unable to cut down on fixed costs in maintaining an assembling plant, the automotive industry is also facing demand shocks and possible liquidity challenges, according to Accenture.

Plants have been shut down across the world, and though some are gradually resuming, like the case with Tesla, it would take some time to remove the kinks in the supply chain and boost public confidence enough to increase demand. The dire picture is painted by Professor Ferdinand Dudenhoeffer when he said, “The Western European automobile market will need about 10 years to reach the size of 2019 again.”

E-commerce

One would expect that e-commerce platforms would be the biggest winners of the coronavirus pandemic. After all, reducing trips to brick-and-mortar outlets should lead to a boost in fortunes for online retailers. Just like streaming sites, though, the effects have been mixed.

For businesses dealing in essential goods, demand has been high across major platforms. E-commerce platforms offering grocery and gourmet items have seen a 75% boost in demand, according to a Feedvisor report. Beauty and personal care product e-commerce sites enjoyed a similar fate, with demand rising some 50% after the first week of March. As a result, reseller sites like Amazon have enjoyed a generally favourable fortune even as they define and redefine what constitute essential goods.

Telecommunications

While there have been clear gainers and losers from the coronavirus pandemic, some firms operating within certain sectors have been left with a bitter-sour taste. This is mostly true for telecom operators.

On the one hand, the lockdown directives have put more families at home, thereby increasing demand for broadband. The surge in demand has put considerable pressure on bandwidth infrastructure, forcing telecommunication companies into a corner. The congestion has had an impact on internet quality, affecting the accessibility of other services like streaming. For example, Disney+ had to postpone its European launch on advice from the EU due to internet congestion, the Guardian reported. Both Amazon Prime and YouTube also deployed plans to reduce “streaming quality in Europe to prevent traffic overload in the face of coronavirus pandemic” for a while.

Takeaway

COVID-19 has changed the way we live our lives. As fashion trends begin to favour face masks, businesses in the tech world have had to switch to online real estate in order to remain operational. Work-from-home businesses have seen a significant rise in fortunes, as have gaming publishers. In addition, e-learning platforms have made it possible to provide a near-seamless transition, at least in areas where telecommunication networks have allowed it. On the flip side, social distancing has caused shortages in the supply chain of many tech manufacturers. Automobile and gadget manufacturers have been particularly hit. The effect of the coronavirus pandemic on the tech sector has been mixed so far. As businesses adjust and fine-tune their policies, the new normal will usher in newer innovative and even more accessible ways to do business in the 21^st century and beyond.