Exclusives : COVID to Shape Tech Sector for Years to Come: CCS Insight

COVID to Shape Tech Sector for Years to Come: CCS Insight

The coronavirus pandemic has impacted virtually every facet of daily life. The tech sector is no exception, even if it has something of an advantage over other industries, according to CCS Insight.  

“In almost all countries, the technology industry will recover faster than the overall economy. We would argue that the technology industry’s helping to drive economies out of this recession,” said VP of Forecasting Marina Koytcheva at the London-based market-intelligence firm’s Predictions for 2020 and Beyond event. 

Mobile Market Set for Quick Rebound  

The economic downturn was nevertheless felt throughout, with the largest consumer technology category, mobile phones, struggling significantly.  

“Global shipments plummeted by 24% in the second quarter of the year and will continue to struggle during the economic downturn. This year the forecast is for a 15% decline,” Koytcheva said, adding that device shipments were nonetheless expected to grow strongly next year.  

In contrast, the global economic recovery is expected to take 20-30 months. According to CCS Insight, the mobile market’s projected growth extends to the pre-paid market, at least temporarily.  

“During the lockdown, pay-as-you-go customers fell away as people confined to their homes switched to home broadband to access the internet, but recessionary conditions coupled with attractive offers from mobile operators targeting budget-constrained customers should kindle a resurgence for the segment,” said Director of Consumer and Connectivity Kester Mann.  

CCS predicted the pre-paid sector would experience growth after years of decline only to fall back down in 2022. Of note Verizon, one of the top mobile service providers in the United States, recently made a move to buy TracFone for almost USD$7 billion to give it a leading 33% market share in the pre-paid market. Ronan Dunne, EVP and CEO of Verizon Consumer Group, appeared in an exclusive interview, during which he explained his company’s reasoning behind the acquisition. 

“We wanted to focus our decision out on customer and be less technology-led, particularly as 5G arrives in the market and I see that increasingly blurring the lines between residential and mobility […] So, [we] have the opportunity with the acquisition to broaden out product offerings, to bring the very best of the non-network capabilities of Verizon to the customers in that sector,” he said of what he believes to be growing segment of about 80 million customers.  

Nokia to Be Sold? 

In what was one of CCS Insight’s more aggressive predictions, Mann relayed how they expect a major U.S. company to buy Finnish telecommunications company Nokia in 2021. The reasoning was in part due to how Nokia has arguably failed to capitalize on the U.S. sanctions aimed at China’s Huawei. As recently as September, Bloomberg had reported that Nokia and Swedish provider Ericsson were still facing increased competition in the market in the wake of the U.S. banning Huawei. 

“The acquisition [would hypothetically be] supported by a U.S. government keen to bolster the country’s strength in networking and offers a major boost to the buyer’s telecom credentials. Microsoft or maybe Intel could be candidates,” Mann said, with U.S. Attorney General William Barr recently suggesting the government itself should consider buying a controlling stake in either Nokia or Ericsson to prevent Huawei from making further inroads from a 5G perspective. Mann positioned it as a trend. 

“Over the next three years, governments [will] act to protect national telecom infrastructure,” he said. “For example, in some countries, foreign ownership of telecom companies can be banned. In others, we believe governments will take stakes. 

“Meanwhile, consumers and businesses are identifying new ways to do the work that will only stir further demand. It’s important then that the industry capitalises on new opportunities and identifies new challenges. When we look back, COVID-19 could prove to be a pivotal moment in telecom’s history.” 

Speaking during a Q&A, CCS Insight VP Geoff Blaber said 5G has a role to play, as long as the need for more capacity gets addressed.  

“We’re using data more and more and more and 5G was conceived to address a number of different issues, be it massive [Internet of Things], mission-critical capability, as well as mobile broadband, but what 5G needs to do across the board is provide additional capacity,” he said. “I think that’s the tack that a lot of the carriers and particularly those like Verizon, AT&T are focusing firmly on in terms of their roll-out of mmWave in particular.” 

The New Normal of Working from Home 

Ultimately, CCS Insight predicted the trend of working from home would continue and also influence operators’ product offerings. They hypothesised that operators would start offering dedicated work-from-home packages to consumers starting in 2021.  

“Instead of a traditional prime focus on dense, urban environments, [operators] will seek to bolster fixed-line and mobile connectivity in suburbs and commuter belts. It was interesting to hear about a change in location for example for the business site of UK operator EE back in May,” said Mann. 

Of course, enterprises in general will be impacted, with CCS Insight’s latest IT Investment Survey revealing two thirds of C-level executives plan to increase their IT budgets in 2022. By that point, CCS predicts more than half of all office-based employees will continue to work primarily from home. Another interviewee, Karandeep Anand, VP, Head of Workplace at Facebook, agreed. 

“My expectation is that we will not go back to the world we knew. We will go back to the new normal where employees everywhere [and] employers will be asking questions on, if we could do this during the pandemic, why not take forward the learnings and make the world a lot more flexible […]” he said.  

CCS Principal Analyst of Workplace Transformation Angela Ashenden had a unique perspective, referring to the pandemic as an experiment during a Q&A session. 

“We’re in a situation where people are learning how to behave differently, work differently both individually and as a team, as a business and the shift that we’re getting now as a result of going through this collectively all at once is very different to what we would have had in any other situation,” she said.  

“[…] A lot of the investments that are being made right now are kind of changing the processes that are fundamental to businesses’ operations and once you start to make that shift it’s likely to be permanent,” she continued. “Really interesting things that we probably wouldn’t have even thought about had we not been in this situation, but it kind of starts to introduce that first stepping stone into how we can take advantage of these technologies going forward.” 




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