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Big tech could emerge stronger from COVID-19

by Mar 30, 2020Marketing

 

While the rest of the economy is tanking from the crippling impact of coronavirus, business at the biggest technology companies is holding steady — even thriving. With people told to work from home and stay away from others, the pandemic has deepened reliance on services from the technology industry’s most prominent companies while accelerating trends that were already benefiting them.

 

Increase in demand for cloud computing platforms

For companies managing their internet infrastructures, making adjustments to computing needs on the fly is expensive and complicated. Cloud computing makes it easier. Companies were already dumping their own data centers to rent computing from Amazon, Microsoft, and Google. That shift is likely to speed up as millions of employees are forced to work from home, putting a strain on corporate technology infrastructures.

Increasing usage of remote and collaboration tools

Microsoft has aggressively pushed its new business messaging and collaboration tool, Microsoft Teams, which competes with the independent company Slack. Last week, Microsoft said the number of users on Teams had grown 37 percent in a week to more than 44 million daily users. There have been at least 900 million meetings and call minutes on Teams every day.

Grocery delivery apps are in demand

Amazon has muscled in on brick-and-mortar retailers for years, but shoppers now reluctant to go to the store, are turning to the e-commerce giant for a wider variety of goods, like groceries and over-the-counter drugs. Amazon said it was hiring 100,000 warehouse workers to meet surging demand. While Amazon has changed shopping habits for items like books, getting customers to trust it with groceries has been challenging. That’s now changing.

Other grocery delivery apps including Instacart, Walmart Grocery, and Shipt, have begun to see record numbers of daily downloads. Instacart plans to hire 300,000 gig workers over the next three months, more than doubling its current base.

Increase in traffic to video streaming sites and social media platforms

Voice calling over Facebook’s WhatsApp messaging service has doubled in volume. Facebook’s Messenger app has had similar growth. Analysts are bullish about Facebook’s prospects because many people turn to it for news in times of crisis and to distract themselves while working from home.

Downloads of Netflix’s app — a proxy for traffic from the streaming site — jumped 66 percent in Italy. In Spain, they rose 35 percent. In the United States, where Netflix was already popular, there was a 9 percent bump. Streaming services like Netflix have dampened box office sales for movies in recent years. Now, as movie theaters close under government orders, Netflix and YouTube are gaining a new audience.

Video game usage and live streaming have spiked. Globally, the weekend of March 14 saw a significant increase in streaming audiences over the previous weekend, with Twitch’s viewership going up 10% and YouTube Gaming’s by 15%. Verizon found that online gaming has increased by 75% during peak hours in North America, while streaming is up 12%.

Increased usage of apps

Even Apple, a company with hundreds of closed stores around the world, is increasingly looking as if it will emerge from the pandemic in good shape. Many of Apple’s factories are nearly back to normal. People are spending more time and money on its digital services. Last week, Apple even released a lineup of new gadgets.
More time and money spent on phones is also good news for Apple and Google because they take a cut of most app sales and in-app purchases. Over the past two weeks in the United States, Apple and Android App Store revenue has risen 14-20%.

The largest tech companies could emerge much stronger

That’s not to say major technology companies shouldn’t be worried. Advertising, the lifeblood of Google and Facebook, tends to suffer during economic downturns. The stocks of Apple, Microsoft, Amazon, Facebook, and Google’s parent company, Alphabet, have collectively lost more than $1 trillion in market value in the last month. And Microsoft, Twitter, and Apple have cut their short-term financial forecasts because of slowing consumer spending.

Beyond the big five, things have been more of a struggle. Communication tools like Zoom are now essential, but ride-hailing firms like Uber and Lyft and property-rental sites like Airbnb are seeing customers vanish. The $3.9 trillion global technology industry will suffer this year, though just how much remains unclear.

But when the economy does eventually improve, big tech could benefit from changes in consumer habits. And despite more than 18 months of criticism from lawmakers, regulators, and competitors before the pandemic hit the United States, the biggest companies are likely to finish the year stronger than ever.

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