Predicting which parts of the telecoms and technology sectors will thrive after COVID-19 is extremely difficult (to say the least).
On the one hand, we hear that sales of smartphones are down about 16%. This is not surprising as people have simply not been able to go to a shop and get attracted to the latest model.
This is, of course, true across many sectors.
The clothing sector has been decimated as no-one needs a new shirt or dress to go to the office. The hygiene sector has also been hit, as people do not feel the need to keep their hair as clean and respectable as before.
Then we hear that 5G handsets are flying off the shelves in China, along with the whole 5G market. Even before the rest of the world locked down, China’s 5G mission had taken off. Now that the lockdown in China has been eased, sales of 5G handsets have roared ahead.
You would be forgiven for thinking that telecoms and technology would thrive in the pandemic as the vast majority of workers who can work from home, work from home. Yet, reports suggest that the mobile telecoms market will fall short of predictions by a staggering $51 billion, a hole almost as big as the global losses from fraud each year (which will probably go up).
The problem is, of course, that telecoms and technology have never – if we are honest – been very creative with pricing. Telecoms companies still insist on charging us for connectivity and usage or, in many cases, in an ‘all you can eat’ model. Well, right now users are eating many times more than they used to. Models on whether these plans made money, from many years ago, suggested that the majority of users never got to the end of their monthly allowance. Now, of course, they sail through it.
We know that usage of telecoms and technology devices and services have skyrocketed. Cloud service usage has increased by factors in the high hundreds of percentage points and it is, therefore, the cloud providers who are benefitting.
The real question is what happens when a new normal emerges. Can telecoms companies reverse the trap (of their own making) that they have fallen into? Usage will remain high and customers will not like an arbitrary increase in prices. Competitors will be sitting in the wings, waiting for those dissatisfied customers.
5G will not help either. Whilst many have predicted that the enterprise and business markets are there for the taking by telecoms companies, it turns out – quelle surprise – they are missing the opportunity (more detail on this later this week).
And this question is not just laid at the door of telecoms.
Companies that have been thrown into the limelight by the new stay at home rules have seen usage soar, without the extra revenues to cover the increases in cost.
Predicting what will happen and who will win on the telecoms and technology rollercoaster after the crisis is a dangerous game.
But it will be fascinating to watch.