What happens when this is over, when all the noticeable impacts of COVID have gone? It’s surely a heady prospect for most of us personally, but what might it mean tech markets? How many things did COVID promote that will now be “un-promoted”, and how many suppressed things will now expand? A lot of companies are trying to read those tea leaves, and I’ve tried to model the trends too, so I’ll throw my predictions into the ring.
Let’s start with the obvious, which is the work-from-home (WFH) momentum that COVID largely created. In early fall of 2020, over three-quarters of companies were telling me that they expected to stay with WFH even when it wasn’t mandatory. Today, that number is less than a third, so most companies say that they will not make remote work a true alternative to traditional office work. This will have an impact on video collaboration tools, on the sale of laptops used in WFH, and on broadband service consumption.
Not, perhaps, quite as much as the numbers would suggest. While most companies don’t intend to replace offices with WFH, most do expect to allow more WFH, and almost half think that the majority of their administrative staff would be working from home at least two days a week. Not only that, companies believe that meetings with people outside their own organization will decline sharply. For example, among the two-thirds of companies that say they won’t replace office with WFH, almost 80% say that they will retain remote collaboration tools and video calling for these outside meetings, even using them for prospecting.
The net impact of all of this would be to reduce the use of video collaboration tools like Zoom and Teams by about 20% within a year of the end of COVID impact on gatherings and behavior. Even before that, we could expect sales of technology tools like laptops and home WiFi, designed to facilitate in-home work, to decline by about that same 20%. There is likely to be a small shift in broadband services and providers as people go back to a “normal” home broadband consumption model, but that won’t be as dramatic as the shift in broadband use created by other factors below.
While WFH momentum will reverse itself a bit after COVID, the use of portals to create direct engagement with customers and partners will not. In fact, companies tell me that they will be expanding their use of “web portals” to connect with stakeholders, and even to empower their workers while at their desks. Even though two-thirds of companies wanted to return to the office at least much (if not most) of the time, they all expected that they would still be working to make their processes less dependent on physical co-location. Call it “WFH in waiting”, which is one of the motives companies offer for the continued development.
This is important because the increased use of cloud computing can be traced largely to the portal concept. If use of portals will be expanding even post-COVID, then public cloud service use will also be expanding, and shifts in process management thinking will also likely continue to develop. Application design and process automation, then, have been permanently changed. So has hosting, in ways that I don’t think the market has yet fully appreciated.
The fundamental, core, transaction processing associated with most businesses is more static than we think. Take banking; the elements of a financial transaction are nearly fixed, it’s the presentation of the information that tends to change. That means that the “front end” of applications is actually where most changes are made, and if that goes to the cloud (which it has been doing during the lockdown) then the dynamic part of applications goes there. If the front-end stays, then the IT spending balance shifts permanently toward the cloud. It’s early to try to model this stuff given that we’re not even out of the pandemic at this point, but one effect that my model predicts is that the percentage of applications that could be moved to the cloud will increase from 23% to 37%, better than 50% growth. That means that in addition to shifting front-end application logic to the cloud, some core logic will be pulled through.
By 2024, I think it’s very possible that IT spending will have shifted to the point where over half of it is directed to public cloud services, something some forecasts have suggested incorrectly that we’ve already reached. Enterprise cloud spending isn’t there yet, not nearly so, and even total public cloud spending hasn’t reached 50% of total IT spending.
This total-spending category includes the startups and social media players who really account for the largest chunk of spending on the cloud today. By around 2024, that will continue to be true only if “carrier cloud” takes off, and 2024 is likely too soon for that to happen. Thus, we could see true enterprise cloud spending dominating public cloud computing in just three years.
We’re only now learning how to build the kinds of applications that will dominate in three years. Simplistic statements like “cloud-native is sweeping development” or “the cloud will mean containers are the way of the future” are only partly true, and the part that is true stems as much from the broad fuzzy definitions we have for the terms related to the cloud. We don’t know how hybrid applications, which is what nearly every business will run, are optimally built, because our use of hybrid cloud today is conserving prior application development in the data center. Within three years, orderly modernization will provide the opportunity to rethink these hybrid applications, and where they will go is still a bit of a mystery.
On the consumer side, we have a similar balance of what-changes and what-doesn’t. Lockdowns have limited social interaction and reshaped entertainment in a number of ways, and a relaxation of COVID restrictions will impact different parts of the social/entertainment story in different ways, some very complex.
COVID has increased the use of chat and social media, and my model says that at least half the growth in use will be permanent. However, the growth was modest to start with because the group that was most impacted in this area (young people) were already highly engaged via social media. Thus, it doesn’t appear that a COVID recovery would impact social-media revenues or activity.
On the entertainment side, there’s no question that streaming has benefited from lockdown behavior. Not only were people more likely to stay home, TV production was seriously impacted, meaning there were fewer new shows available. People had to find alternative video resources, and they did. Some of that behavior, accounting for as much as 40% of the growth streaming saw in 2020, is going to taper down as things get back to normal.
Gaming is also almost certain to taper down from what was explosive growth during the lockdown. However, there’s evidence already that this particular entertainment sector might not dip as quickly, because gamers change their habits more slowly than entire families, whose collective behavior creates a lot of the streaming market. In fact, gaming is likely to be a better sector in all of 2021 than TV and streaming, since TV production won’t recover until the fall, at the earliest.
All of this, of course, depends on the pace of vaccination and the way that mutations to the virus would impact spread of the disease, and thus human behavior. It’s likely that if there is indeed a spring/summer wave created by mutations, companies would be even more likely to invest in a WFH approach, and even encourage a persistent shift in practices.
Overall, it’s clear that COVID has brought about permanent changes in how we use technology, because it’s brought about the first massive change in “work behavior” and entertainment that we’ve seen in decades. Some of the changes are taking us down new pathways, and those shifts may bring about future shifts. We may not see the end of the impact, or even the end of the pace of changes the virus generates, when the infection period passes.