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Internet of Things May 2020 Viewpoints

Technology Analyst: David Strachan-Olson

The Pandemic Crisis:
Key Forces That Will Shape the Future of Digital Connectivity and Lifestyles

Special-Edition Viewpoints

This special-edition Viewpoints is part of a set of analyses that investigate the impact of the covid-19 pandemic on technology commercialization. These documents identify key uncertain forces across global societies that are likely to have a major influence on prospects for six consequential technology domains. This special-edition Viewpoints about digital connectivity and lifestyles replaces the standard May Collaboration Tools, Connected Homes, Internet of Things, Mobile Communications, Portable Electronic Devices, and User Interfaces Viewpoints.

Read more about the special analyses

The coronavirus-disease-2019 (covid-19) pandemic is causing significant disruption to almost all industries and forcing companies to prepare for the worst. However, most digital platforms and services are not only surviving the initial pandemic but, in many cases, thriving. Lockdown orders and social-distancing measures are leading to a massive increase in the use of digital platforms for remote work, education, entertainment, shopping, and social interaction. Rapid changes in user behavior are also affecting communication networks and device preferences.

Although the pandemic is already having big impacts on digital connectivity and lifestyles today, much more dramatic and long-lasting shifts may occur. Companies seeking to understand the complex impact of the coronavirus pandemic should examine how uncertainties play out with respect to pandemic-related forces. This special-edition Viewpoints explores a wide range of the key forces that surround the future of digital connectivity and lifestyles as a result of the pandemic and illustrates the ways in which various potential outcomes could influence the shape of the industry during the coming five to ten years.

Economic and Geopolitical Dynamics

Economic forces shape consumer behavior, capital availability and investment, adoption rates of technologies, and much more. Geopolitical considerations also play important roles in manufacturing and supply chains, the regulation of international digital platforms, and the development of communication networks. Economic and geopolitical macro forces are important, but such forces do not alone influence outcomes for digital connectivity and lifestyles. For example, during 2008 when a global financial crisis was in full swing, Apple's App Store first appeared, Android smartphones became available, and commercialization of GPS navigation apps took major steps forward.

  • Economic recovery. In the near term, strong intervention measures by governments and central banks might stabilize the global economy and bring about a resumption of economic growth within one to two years. Alternatively, the pandemic may drag on for well more than two years, putting a major strain on the global economy despite monetary intervention measures. Customers might continue to value electronics-product categories that respond to needs for staying active, productive, and engaged indoors, but they will do so in accord with their budgets and abilities to adapt to the new normal. Developments for products and services in more future-forward categories, as with advanced forms of 5G, could see delays or major interruptions.
  • Globalization and trade. The pandemic aggravated an existing trade conflict between China and the United States, potentially accelerating deglobalization trends, such as trade restrictions, border closures, reshoring of manufacturing, and limits on foreign investment. Geopolitical destabilization, especially in developing regions that have fewer resources to handle economic disruptions, could also accelerate. Alternatively, the global pandemic might galvanize countries and regions into cooperation, which could lead to a reversal of deglobalization trends. In the years following the pandemic, countries may reduce trade restrictions and embrace trade openness to accelerate a global economic recovery.

Use and Demand Shifts

The pandemic has led to dramatic shifts in how people live, work, and connect with one another. Many employees find themselves working from home, and everyone is finding new ways to celebrate life's special events—including birthdays, weddings, and funerals—while following social-distancing guidelines. Significant uncertainty exists about how these recent shifts will influence and alter the way people connect and communicate.

  • Remote work and learning. The pandemic is providing a huge test of remote work that might result in a long-term and widespread shift in organizational policies. In the future, many companies may allow employees to work remotely for a few days a week, and some companies may allow employees to work remotely full time. Schools and universities may return to in-person teaching but also increase offerings of e-learning resources. Alternatively, remote-work patterns may revert to previous practices. Employers may want to return operations to "normal" as soon as possible by bringing workers into the office. Companies may continue to use collaboration tools they began to use during the pandemic, but such tools do not replace in-person offices and meetings.
  • Immersive digital communication. Social-distancing measures have led to a significant increase in the use of digital tools for communication, which range from audio calls to video calls to adventures in virtual and augmented environments. A prolonged pandemic with lingering social-distancing measures could encourage individuals to seek out more immersive ways to interact at a distance. Multiuser video calling will remain popular, but people might seek out ways to play games and go on adventures in virtual worlds, such as Fortnite and Minecraft. After social-distancing measures subside, people may value immersive platforms more than they did previously, to connect with people both close and far away on a regular basis. Eventually, these groups could seek out more immersive means of digital interaction and enhanced telepresence. Alternatively, people may leverage multiuser video calling but not seek advanced forms of digital communication and interaction. As the pandemic subsides, people may seek face-to-face interactions, so the use of digital communications may decrease to prepandemic levels. However, such platforms will likely remain popular among younger generations.
  • E-commerce/delivery society. The pandemic is leading to a significant increase in e-commerce shopping and the use of local delivery platforms. Such changes could have dramatic impacts on the future of retail, digital shopping, and digital transactions. Even if the pandemic subsides, people may continue to use apps and delivery services for everyday shopping of household items and groceries. Small restaurants that survive the pandemic may do so only by selling food through delivery apps. Brick-and-mortar retailers would struggle in a world dominated by e-commerce. Alternatively, e-commerce shipments and home delivery may return to normal levels as the pandemic subsides. Media coverage of the exploitative practices and platform dominance of e-commerce and delivery companies may encourage consumers to buy locally and support small businesses hurt by the pandemic. Additionally, some consumers might seek out physical retail and a return to normalcy after the pandemic. New web-accessible local outlets might have advantages over centralized e-commerce operations in moving goods to people quickly.

Power of Digital Platforms and Services

As the pandemic took hold, significant portions of everyday life—including working, buying groceries, and connecting with friends—began to undergo mediation through digital platforms. Going forward, the power and influence of these digital platforms will play a key role in shaping the way the world recovers.

  • Big-tech power. As people flock to digital platforms during the pandemic to connect, shop, seek entertainment, and more, the power of these platforms could continue to increase. Many people will likely gravitate to platforms from the largest companies, which could cement their dominance across many industries for the next decade. Small players could face difficulties in scaling up services and reaching new markets during the pandemic. Alternatively, the increased use of platforms controlled by a few powerful companies might accelerate the growing backlash against big tech companies. As the pandemic subsides, governments may use the exploitative practices and broad reach of tech companies during the pandemic as evidence to increase regulation and possibly break them up. During this upheaval, new entrants might find ways to introduce and grow their own services and platforms.
  • Focus on digital services. The global pandemic brought significant disruption to global supply chains, brick-and-mortar retail, restaurants, and other industries that require face-to-face contact. In comparison, many companies that provide digital services faced less disruption. Companies may place an increased emphasis on providing digital services to consumers and companies as a way to mitigate future disruptions and diversify revenue. Many companies already have plans to develop digital services, but the pandemic could accelerate and expand the scope of these plans. Alternatively, many companies may recognize the importance of digital services, but digital projects might fall by the wayside. Tight budgets after the pandemic could force companies to focus on ramping up supply chains, manufacturing, and distribution. Companies that delay developing digital services could fall behind competitors.
  • Digital content. Because of lockdowns, many social-media and digital-entertainment platforms, both established and emerging, have seen increased viewership and spending (although advertising is down). The pandemic may provide the perfect opportunity for these companies to establish a permanent foothold that continues for years. Conversely, these platforms might find success during the pandemic but could face difficulties as the pandemic subsides. As individuals return to normal life, they will have less time for digital entertainment, which could lead to a decrease in viewership and spending. Imaginably, interest in outdoor activities could rebound and increase beyond its previous baseline.
  • Collaboration and communication platforms. The rapid increase in remote work and social distancing is propelling a huge number of companies and individuals to use collaboration tools and communication platforms. Most likely, companies will lean toward large well-established collaboration tools—in particular, Zoom, Slack, and Microsoft Teams. Needs for all relevant personnel to be on the same platform favors the platforms with many existing users ("network effects"). For personal communications, individuals will likely use communications platforms they are already familiar with. Alternatively, companies and individuals might start by using established platforms but, with time, seek other tools that better meet their niche needs. As the pandemic drags on, companies will find new digital tools that allow them to replace face-to-face interactions for training, workshops, and conferences and that have enhanced protections against eavesdropping.

Digital-Infrastructure Momentum

The pandemic is highlighting the importance of digital infrastructure—such as telecommunications and cloud computing—to connect people, enable businesses to function, and provide entertainment. The pandemic is also forcing governments and communications companies to reconsider existing plans for infrastructure improvements. Changes in the type or pace of digital infrastructure deployments will affect opportunities for many other companies providing connected services.

  • Communications-infrastructure deployments. The sudden shift in web traffic from workplaces to homes has placed communications infrastructure in many regions under strain. Governments might respond by encouraging and partially financing digital-infrastructure improvements—in particular, in low-income areas. School systems could see cellular-equipped laptops and tablets as essential infrastructure for every student. Improvements could come from both traditional broadband services and cellular substitutes. Alternatively, service providers and governments may see the pandemic as a temporary disruption, and so make no major network improvements in the near term. Infrastructure-capacity limits may begin to affect the types of services and capabilities end users can access.
  • 5G deployments. Many stakeholders envisioned 2020 as the year 5G would take off after the first 5G devices entered the market in 2019. High rates of unemployment and low incomes would likely lead to individuals' keeping smartphones for longer periods and opting for budget models that lack 5G. A trade war that shows no abatement at present could cause many cellular companies to slow 5G deployments. Alternatively, governments may try to jump-start domestic economies by investing in infrastructure projects—including 5G cellular networks. Widespread 5G deployments could enable companies to develop innovative smart-city and robotic systems.
  • Internet of Things (IoT) deployments. During the pandemic, cities might encourage the use of IoT sensors and cameras to help control the spread of the disease by monitoring people's temperature, identifying people not practicing social distancing, and reducing interactions between city employees and residents. The cameras might also have expanded roles in preserving physical security in the event that an economic downturn accompanies increases in crime. In enterprises, connected devices for remote monitoring and automation could enable companies to reduce the number of onsite staff and limit their face-to-face interactions. As the pandemic ends, companies and governments might use low interest rates to finance IoT deployments. Alternatively, the pandemic could slow IoT initiatives for both cities and organizations. Economic hardship could slash municipal budgets, preventing deployments of digital and IoT systems. In factories and industrial operations, widespread unemployment could depress wages to the point at which companies could improve operational efficiency without leveraging digital technologies.

Digital Health-Care Imperatives

The global pandemic is pushing many health-care systems to their limits and will likely result in a significant rethink of modern health care. In a matter of months, telehealth has shifted from an optional service to a required one. Many companies—including technology and device companies—already see fitness and health as key areas for expansion in the coming years. A postpandemic world could provide the perfect opportunity for companies to revolutionize health care and commercialize new devices, platforms, and services.

  • Digital disease tracking. Many governments are using digital systems to track the spread of the virus through populations and monitor the effectiveness of lockdown rules. As the pandemic subsides, governments might choose to keep such systems in operation to monitor for covid-19 flare-ups and mutations but also to track other contagious diseases. Individual nations and players are likely to arrive at individual strategies that are sensitive to individual populations' acceptance of travel restrictions or enhanced surveillance. Some nations' enhanced-surveillance measures could serve political rather than epidemiological purposes.
  • Personal health monitoring. The long incubation period of covid-19 and its asymptomatic nature might accelerate the development of low-cost techniques for personal health monitoring. Research projects might lead to the development of wearable devices and at-home blood tests that can detect an immune response days before an individual shows symptoms. However, the success of these efforts remains uncertain. Even the criteria for success are up for grabs, as relative indications of life signs might prove useful, even if they do not fulfill needs for gold-standard medical tests.
  • Hospital 2.0. Governments might go to work analyzing the failures of existing health-care systems and committing to rebuild hospitals and health-care facilities to prepare better for future pandemics. Government grants could enable hospitals to invest in new digital technologies for providing health care, robots for logistics and cleaning, and rapid disease diagnostics. Alternatively, a lack of government support and significant costs resulting from the pandemic could push many health-care facilities to the edge of bankruptcy. Potentially, governments may see that covid-19 was a once-in-a-hundred-year event and that no major innovation in hospital technology is necessary.