Tracking the Impact of the COVID-19 Emergency on the Tech Sector
The COVID-19 emergency has expanded at lightning speed throughout the world, and across the tech sector.
As IT vendors and users retrench and reconsider how they’ll survive (both as firms and as living, breathing human beings), let’s review some of the key milestones of industry impact over the past few weeks.
Corporate responses to the outbreak
Practically every tech vendor has responded with public statements of what it’s doing to battle coronavirus and also to help customers and employees through this tense period. Here are statements from Amazon, IBM, Cisco, Salesforce, and Microsoft to that effect.
What’s most impressive in tech sector’s response to the COVID-19 crisis is how they’ve thrown their deep R&D capabilities into the common cause. Headlines for some noteworthy coronavirus research initiatives include:
· IBM Summit supercomputer joins fight against COVID-19
· Alphabet's Verily is building COVID-19 triaging tool as Trump declares national emergency (Updated)
· DeepMind uses AlphaFold system to make (informed) guesses about COVID-19
· Kaggle calls data scientists to action on COVID-19
· Google Is Rewarding Users for Sharing Coronavirus Symptoms
· Oracle to provide platform to gauge malaria drug effectiveness vs. COVID-19
· Microsoft's Cloud and AI Services Tapped in Coronavirus Fight
In their internal operations, the tech sector appears to be weathering the turbulence as well as it can these past few weeks. As employers, most have been quite proactive about helping their personnel manage to remain productive through the necessary “social distancing.”
Many tech firms have almost certainly responded like Microsoft did—i.e., send an urgent internal alert email-- when it learned that an employee had tested positive for COVID-19. Also, Microsoft offered paid leave to employees who can't work from home while schools are closed due to the outbreak. Google is delaying employee performance reviews and promotions because of the pandemic.
And, of course, most companies have asked employees to work from home whenever possible.
Disruptions galore
Pandemic-related travel disruptions have hit the tech industry with gale force.
One of the first signs of the seriousness of the crisis was when, 3 weeks ago, Amazon, Google, Apple, Salesforce, LinkedIn, and other large companies restricted employee travel due to COVID-19. As with many companies in non-tech sectors, most of these restricted employee travel to all except "business critical" trips, and many completely banned travel to hard-hit countries such as China and Italy.
Furthermore, one tech VC firm, though not banning international travel outright, asked its employees to log everywhere they go in case they catch the coronavirus, saying they have a "moral responsibility" to stem the spread.
In addition, many tech conferences and other events around the world have been canceled, postponed, or made entirely virtual.
Outright cancellations included Cisco Live Melbourne, E3, Facebook Global Marketing Summit, Facebook F8, Google I/O, Google News Initiative Summit, Microsoft Inspire, Mobile World Congress MWC Barcelona (GSMA), SAP Ariba LIVE, SAP NOW, and SXSW. Gartner canceled all of its conferences through August, while O'Reilly Media announced that it is canceling all of its upcoming in-person conferences and shutting down that portion of its business indefinitely.
The in-person events that were made virtual-only instead of being canceled outright included Adobe Summit, Apple WWDC, Aruba Networks Atmosphere 2020, Atlassian Summit 2020, Cisco Live, Dell World, DocuSign Momentum, Domopalooza, ESRI Developer Summit, F5 Agility 2020, Google Cloud Next, Microsoft Build, Microsoft WSLConf, Microsoft MVP Global Summit, Nvidia GTC - GPU Technology Conference, ODSC East 2020 - Open Data Science Conference, Pwn2Own, Red Hat Summit 2020, Salesforce World Tour Sydney, SAP Concur Fusion, SAS Global Forum, and Shopify Unite 2020 developers conference.
The remainder were mostly postponed, except for a handful that took place this month as scheduled (e.g., OFC 2020, RSA Conference) and others (e.g., HPE Discover, Infor Inforum 2020, Microsoft Ignite, Oracle Code One, Oracle OpenWorld, SAP SAPPHIRE NOW, VMworld) still planning to go on later this year as scheduled.
Meanwhile, countless internal meetings at tech vendors (and their customers and partners) have been canceled, rescheduled, or moved to virtual channels. For example, Amazon postponed its twice-a-year all-hands meeting because of the COVID-19 emergency.
External meetings with partners, customers, VCs, and others have been impacted, which means that the pace of deals—such as mergers, acquisitions, funding rounds, etc.—has been pinched severely in the past few weeks. The most high-visibility casualty was Xerox’s attempted acquisition of HP. In terms of the startup community, the most salient impact was Y Combinator’s decision to make its “Demo Day” virtual rather than in-person. And top VC firm Kleiner Perkins announced that it had signed the first term sheet of the "work from home" era, rather than do it in the customary in-person meeting setting.
Product launches and standards-making activities have been postponed due to the COVID-19 emergency. For example, Nvidia postponed the announcements it had planned to make at the now-virtual GTC, and the same will probably apply to many other vendor-sponsored conferences that were disrupted by the pandemic. 3GPP, the international organization responsible for 5G standards, has postponed updates due to the fact that the COVID-19 pandemic had prevented key face-to-face meetings.
Many cloud and SaaS service providers have been struggling to stay online 24x7 during the lockdowns that have begun to take hold in many countries and states.
Needless to say, the clampdown on travel and meetings has wreaked havoc on the IT supply chain. Tech vendors are dealing with supply chain disruptions in various ways. HP has set up an executive-level “war room” to manage COVID-19-related component shortages.
Before it shut down its retail outlets entirely, Apple warned its Apple Store Genius employees of impending shortages of replacement iPhones for up to the next four weeks and encouraged them to offer loaner iPhones for the time being. Subsequently, two of Apple’s India-based iPhone manufacturers had to shut down their factories due to that nation’s coronavirus lockdown.
And Amazon, which through its online retail site, is in many people’s supply chains, has been stressed to the breaking point in its attempt to handle the pandemic-stoked surge in online deliveries. As order volumes grow, Amazon Prime is at risk of failing to fulfill its signature two-day delivery promise. That’s due to the likelihood of delays, mistakes, and shortages exacerbated by growing demands from consumers while trade restrictions intensify and fulfillment centers brace themselves for the possibility of outbreak-related lockdowns and shutdowns.
Amazon’s warehouse workers already report increased workloads and absences. In addition, Amazon is hard-pressed to hire the requisite 100,000 new employees that will be needed to handle expected order volumes in the near term.
Tech-push pandemic-palliative solutions
Cloud computing has been a key platform for helping the world carry on our work and personal lives in spite of the disruptions.
China-based Alibaba, Tencent, and Baidu have offered free cloud services during the pandemic. Also, Microsoft has given priority On Azure capacity To coronavirus response efforts by first responders, health care organizations, and government agencies
Tech vendors have been hard at work on various offerings to help people deal with the confusion, isolation, boredom, and loss of productivity that “social distancing” is producing in the population at large.
In a gesture that one could interpret as equal measures humanitarian and self-serving, tech vendors such as Microsoft and Zoom have promoted the use of their own solutions for enabling remote work, and even provided extensive free trials of the same.
Other tech industry responses to the emergency include such quick-launch offerings as Pinterest’s centrally curated coronavirus information hub, Nextdoor’s social-distancing neighborhood app, and IBM The Weather Channel’s interactive coronavirus mapping app. To help their citizens cope with the crisis, India rolled out a WhatsApp coronavirus-awareness chatbot app, and Singapore open-sourced its contact-tracing app.
Food delivery services such as DoorDash, GrubHub, and Uber Eats have been doing well, considering the growing number of people in quarantine and also the fact that most restaurants have been required to shut down their dining rooms till the emergency wanes.
And of course, usage of streaming services has gone through the roof this month. Many streaming services are offering free trials and other promotions to make those customers stick after the pandemic emergency subsides.
Takeaway
Barely a month ago, one could read the tech press and barely see mentions of COVID-19 (aka “coronavirus”) except for a few reports of vendors pulling out of international conferences where their personnel might be at exposure risk. If that were the extent of it, technology companies could still carry on business as usual, more or less.
But, now that the world economy is at a COVID-19 standstill, late February looks like a halcyon day from the distant past. When Leap Day arrived, we were still enjoying a long-running bull market, a full-employment economy, and sustained innovations and wealth formation radiating from a vibrant tech sector hubbed in northern California.
Now, though, the entire Golden State is on lockdown, as are other parts of the USA as well as major nations in Europe and Asia. A worldwide recession looms, and it’s not at all clear when the crisis will subside or when we can all return to normalcy. For what it’s worth, no one knows if the crazy, unsettled state of the world these days is the “new normal,” or whether we’ll ever bounce back to the sane post-industrial order of things that prevailed before Donald Trump was elected US president.
If nothing else, we’ve seen a huge amount of corporate citizenship emanating from Silicon Valley and beyond in recent weeks. For example, the IT industry, under the new TechToTheRescue.org intiative, is offering free support for nongovernmental organizations (NGOs) to battle COVID-19. The initiative includes more than 100 technology companies around the world who are offering NGOs free help in IT, design, marketing, and legal services in this effort. No tech business is profiting from the help they provide and companies that have declared their support within TechToTheRescue.org agree to make their data public and undertake to provide the offered services as soon as possible.
Even small gestures such as tech vendors donating biohazard safety equipment and offering to build ventilators in the factories say a lot about what the tech sector is prepared to do when lives are at stake. Nevertheless, tech CEOs and their teams are as rattled by this crisis as the rest of us. Though they put on a brave face, the “brutal one-two punch of coronavirus fears and election uncertainty” suppressed investor desire to take a chance on innovative startups in the US and throughout the world.
Unicorns such as Airbnb and Uber whose business models depend on putting people into physical environments that conceivably could infect them with COVID-19 are also under existential pressure.
And even Google and Facebook’s ad-revenue-driven business models are under pressure, so it almost seems like no tech vendor is safe.
And neither are you or me. Fortunately, I've been working from home for many years. And I plan to stick it out here, day to day, until the situation clears.