COVID-19: What Has the Tech Industry Learned?

Since COVID-19 took over about a year ago, the consumer tech business has had to learn to manage an unpredictable and sometimes toxic boss.

Those lessons haven’t been as hard for the tech industry as it has for some others. Nevertheless, the pandemic continues to spread enough indiscriminate chaos that nothing has evaded its grasp. Below are three entries for the “What We’ve Learned So Far at the COVID-19 Consumer Tech School.”

The Obvious: Given adequate infrastructure, devices and resources, the world can entertain itself, and work, and learn from home. Video, gaming and cloud-service subscriptions, computers, game consoles, tablets and TVs have the increased 2020 sales to prove it.

Will it last? Some of it may, but betting on it is probably unwise. Remember when some declared at-home “cocooning” the new way we’d consume entertainment after the last recession? Better TV displays and services helped some of that stick, but the world turned outward again. Imagine the stampede out of the cocoon this time when it is safe to go out again.

Gaming Explosion: Online gaming was already on the rise before home confinement supercharged it. Be it on consoles or gaming computers, the videogaming industry has benefited mightily. Nintendo turned in monster 2020 sales and earnings and its Switch consoles are in perpetual shortage—Nintendo is on track to sell 24 million Switch units by its current fiscal year ending in March.

The pricier next-gen Sony and Microsoft video consoles are in high demand and short supply. Gaming PC sales contributed to 2020’s estimated and unanticipated (pre-COVID) 13% worldwide PC sales bump over 2019.

Game streaming services have soared since the pandemic’s start. Microsoft says it now has more than 15 million Game Pass subscribers, Nintendo more than 26 million paid online subs, and Sony’s PlayStation Plus now has more than 45 million as they’ve all scored big gains during the pandemic.

eSports, too, has managed to thrive throughout the pandemic, but it is set to explode (again) when in-person competitions complete with onsite spectators are once again possible. In the meantime, it is reported that the industry increased 2020 revenues by about 15% over 2019.

Look for this to be a continuing trend even after COVID-19 loses some of its viral punch. The industry is still a mix of games on physical media and newer online offerings. At-home conditions shone a grow light on the emerging online segment.

Semiconductors and Supply Chains Rule: An important lesson learned is making sure the flow of components—especially semiconductors—is uninterrupted. The pandemic economy has exposed a new phenomenon: industries newly dependent on large amounts of chips are scrambling to improve their semiconductor supplier relationships. Automobile manufacturing provides a dramatic case in point.

The pandemic economy sent vehicle manufacturing into free fall in the first and second quarters of 2020, resulting in a back-off on chip orders. When auto demand began to recover in the summer, companies supplying auto manufacturers with electronic components found out that chip makers were busy trying to keep up with demand for computers, cloud servers, tablets and videogame consoles. Now major auto manufacturers are closing factories or sidelining shifts inside those factories until they can get the processors needed to build their ever-evolving “computers on wheels.”  Oops.

The painful lesson? Supply-chain relationships matter and industries new to greater dependence on semiconductors may need to overhaul their supply-chain roadmaps. And those with long-established relationships may need to re-enforce them as supply is further squeezed with almost everything needing processors.

What else has been learned? Be ready for anything and it’s unwise to assume we know what that “anything” is.