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Rethinking Technology Trends for Quarter Two 2020

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The wider impact of COVID-19 on technology, businesses and economies

We are seeing change across the board. While oil prices tumble and the transportation industry slows, demand for virtual working solutions soars. Innovations are stalling — notably 5G rollout and electric car production. Top industry names including Tesla are furloughing staff and cutting salaries. Conversely, other technology innovations deemed more vital are being bumped up and rolled out. Drones and robotics have been enlisted for coronavirus clean-up operations, while machine-learning systems track the spread of the virus. Businesses are learning that they must rapidly adapt, or face up to some serious realities.

Key changes, at a glance:

  • Economic power to slide into a handful of corporate giants.
  • Two decades of globalisation to be unpicked as supply chains are re-evaluated.
  • Cloud computing — coupled with Internet of Things (IoT) devices and big data — to permeate personal and professional lives with changes to consumer and business trends.

Big companies and big government to do business

“The only engine of consumption for the next 12 to 24 months will be government,” Anand Mahindra, Chief Executive of the Indian multinational conglomerate Mahindra Group, noted, and for good reason. Larger firms have better access to capital markets and can lobby governments: two valuable assets as economies and countries recover from the ravages of COVID-19. To add to this, the state is likely to be the major customer while on the road to recovery. This is good news for big technology including Amazon, Apple and Alphabet (the parent company of Google) and a strong reason not to break up the technology giants just yet.

Smaller technology businesses face exposure

On April 3, the US Chamber of Commerce published the Special Report on Coronavirus and Small Business. The survey found that 54 per cent of firms with less than 500 employees were closed or expected to close. Other countries bear a similar narrative. Alongside driving unemployment and filings for state aid, the challenge to SMEs and small businesses have industry-wide implications. Firms in trouble are more likely to be snapped up by their larger rivals, especially in moves towards vertical integration of supply chains. 

Technology industry monopolies

As sole industry competitors enter administration, the survivors become the default monopolists. In the hard-hit aviation industry Sir Richard Branson, Chief Executive of the Virgin Group, published An Open Letter to Virgin Employees on April 20. In the letter, Sir Richard noted how Virgin Atlantic has “created real competition for British Airways, which must remain fierce for the benefit of our wonderful customers and the public at large”. Commenting on their struggling airline Virgin Australia, Mr Branson warned: “If Virgin Australia disappears, Qantas would effectively have a monopoly of the Australian skies.”

Regulation put on hold

Where industry monopolies are indeed the outcome, chances are regulators will stall in efforts to break them up. This is most apparent in big technology where companies are resembling vital utilities more and more. This is compounded by the increasing reliance on big technology for business and commerce. Furthermore, these companies are currently hiring staff and shoring up employment concerns. Like all other utility providers, heavy regulation is a necessity, but new regulation may be delayed.

Technology startups survive or pivot

Governments are stepping in to protect innovation sectors. On April 20, the UK government announced the “Future Fund” aimed at ensuring high-growth companies remain viable. Startups that can pivot have indeed done so — namely those involved in fighting coronavirus. As global recovery progresses, we may see businesses changing tack towards other areas such as virtual working and e-commerce.

Supply chains become less singular

COVID-19 has made the weakness of a sole Chinese supply chain abundantly clear. Increased manufacturing wages in China and the US-Chinese trade war set the stage for rethinking supply chains even before the coronavirus outbreak. Many manufacturers are now looking inwards towards national supply chains. This is most prominent in the United States where tensions with China manifest themselves politically.

Robotics aid local supply chains

Coupled with the desire for less reliance on China, advanced robotics makes the case for rethinking supply chains even stronger. Information technology and telecommunications were the driving force behind the globalisation of supply chains at the turn of the century. Now, advanced manufacturing techniques address the cost difference and build the case for bringing manufacturing closer to home. In response to serious disruptions caused by COVID-19, Japan is preparing to deliver $2.2 billion in aid to assist manufacturers to relocate overseas factories back within its shores.

Spread risk, even at higher cost

COVID-19 has revealed the fragility of the single-origin model and that too many links in a chain increase vulnerability. Joerg Wuttke, President of the EU Chamber of Commerce China, comments that: “The globalisation of putting everything where production is the most efficient is over.” Building a repertoire of smaller suppliers will likely become desirable in efforts to make organisations more robust, even at the expense of raised costs.

COVID-19 accelerates technology e-commerce

In April, Amazon announced plans to hire an additional 75,000 staff on top of the 100,000 brought on in March to keep up with increased demand. Looking at the impact on high streets, Chris Grigg, Chief Executive of British property and development company The British Land Company, sees the COVID-19 crisis as a “stress test” for retailers faced with long closures and that some “may never reopen”. Projected high street closures fall in with the growth of the technology giants as they supply employment and services that are increasingly deemed essential.

Big technology becomes vital

Living online — from work to shopping to communicating with friends and family — is proving convenient for most. COVID-19 has forced rapid adjustments in professional and daily living, with trends set in motion now are likely to remain.

Aside from the startups facilitating this — notably Slack and Zoom — the trend lies largely in the hands of big technology including Facebook, Amazon, Google and Microsoft. The next challenge facing these organisations is how to publicly present themselves. Microsoft, the oldest, has worked for years to revive and rebuild its image of trustworthiness in a manner that other organisations can — and should — follow.

Positive change may occur in the wake of the COVID-19 pandemic. Governments move to regulate big technology like any other utility, globalisation backtracks somewhat and organisations trend away from “growth at any cost” to consider longer-term goals that include resilience and industry collaboration. Let’s hope that these changes are among them.


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