The Tech Industry’s Tectonic Shift | Business

As COVID-19 continues to spread, states and cities across the U.S. have imposed restrictions — from banning large gatherings to lockdowns, with citizens ordered to stay home except for essential jobs and errands, or get outdoor exercise.

These steps came as infection numbers mounted, and the World Health Organization (WHO) stated that COVID-19 was in fact a global pandemic.
It was the first time such a declaration was made since the H1N1 crisis in 2009, during which more than one fifth of the world’s
population became infected, according to estimates.

A great many tech industry conferences and trade shows originally scheduled to take place in the coming weeks have been canceled, including the National
Association of Broadcasters
(NAB) show set for April in Las Vegas, and the Electronic
Entertainment Expo (E3) planned for June.

Of course, more than trade shows have been impacted. The
National Basketball Association (NBA), Major League Soccer and the National Hockey League (NHL) have suspended the rest of the 2019-2020 season. The NCAA also canceled the March Madness basketball tournament.

“Due to concerns related to the coronavirus outbreak, an unprecedented
number of events — from athletic competitions to tech conferences —
are being postponed or outright canceled,” said Gilbert Michaud,
assistant professor of practice in the
Voinovich School of Leadership and Public Affairs at Ohio University.

All of this has thrown stock markets around the world into roller coaster
mode, with some record-setting gains in recent weeks alternating with record-setting drops.

There’s no question that the pandemic is hitting the service industry hard.

Forty-seven percent of retailers expected some downside revenue implications, while 44 percent expected production delays due to COVID-19, in a recent Digital Commerce 360 survey.

“There really is a delicate balance between achieving public health
and negative economic consequences,” Michaud told the E-Commerce Times.
“Immediately and directly, markets will suffer due to uncertainty,
panic, and an overall lack of spending. It’s important to understand
the multiplier effect at play here.”

The Cost of Canceling

This year’s biggest technology trade show, CES, took place as scheduled
in early January, attracting visitors from around the world, including
many from China. Although there are no reports that the show helped spread
COVID-19, other trade show organizers opted to outright cancel rather than take the risks.

“There are enormous costs from an economic perspective as events and
conferences are canceled,” said Michaud.

“There are obviously the direct, short-term implications of a
cancellation, such as with registration fees, airline and hotel sales,
dining, and others — but there are also longer-term threats,” he

“The overall uncertainty and desire for caution may cause apprehension
for a university to send a professor to a conference presentation, or
for a company to send an employee to a future trade show,” Michaud
pointed out.

Wider Costs Understood

Cancellations are costly — beyond the lost revenue for the direct
organizers and local businesses.

“A large event cancellation will cause hardships for those directly
employed at say, a sports stadium, such as in ticket sales or
security,” said Michaud.

“Then we also have ancillary implications for vendors and strategic
partners who are also losing business — and finally, all of those
direct and indirect workers usually spend money in their local
economy, such as at restaurants or movie theaters, but with less local
spending comes deeper economic fallouts,” he added.

“This last piece is what economists call ‘negative induced effects’ due
to a lack of household-to-business economic activity,” said Michaud.

It could have a wider reach in terms of how business is done as well.

“We don’t see situations like this very often, where society is forced
to make such a dramatic shift in how we live and interact with one
another,” said Thomas LeDuc, vice president of marketing at
cybersecurity firm

“As a marketer, it means that I’ll need to find different ways to
reach audiences and serve customers,” he told the E-Commerce Times.

Going Virtual

In recent weeks, shutdowns have impacted schools, bars, restaurants and
almost all other forms of business across the United States.

“The ‘cancel everything’ mentality is devastating but necessary,” said LeDuc.

The Semperis Hybrid Identity Protection cybersecurity conference was
postponed, but alternative ways to host the event are now being

“We’ve experienced such remarkable support from the world’s foremost
identity leaders to participate in any capacity, even if that means
virtual sessions,” LeDuc remarked.

Many trade show and conference organizers are opting to utilize a
digital or virtual experience instead — and companies such as
Microsoft and Ubisoft already have announced plans to hold online-only
events in place of their respective E3 press conferences.

“Many companies, at least in the short term, will be using virtual
alternatives to run their operations entirely online to avoid
face-to-face interaction,” said Ohio University’s Michaud.

This will not be without some challenges, especially for smaller
companies — especially if employees also are working remotely.

“There are potential IT headaches, and managing employees remotely can
be a challenge,” said Michaud. “This transition may be easier for the
tech industry, but for sectors such as government, healthcare and
legal, which require interaction and typically work off of legacy
systems, this is a huge concern.”

Business Disruption

Given the fact that COVID-19 could remain a serious threat for weeks
or even months to come, it could take a while before business is back
to normal. It has impacted the tech supply chain as well as the way many tech giants operate.

Larger companies could fare better — at least in the short term.

“Some companies do a good job of diversifying their portfolio to stay
consistently resilient and to take advantage of synergies,” said Mike
Jordan, vice president of research at
Shared Assessments.

“Comcast is known for providing Internet, cable TV and phone service —
but they also own a broad entertainment portfolio that includes media
production through NBCUniversal, and Sky in the UK,” he told the E-Commerce Times,
“and live entertainment and sports production, including ownership of the
Philadelphia Flyers hockey team and the Philadelphia Fusion eSports

In addition, Comcast owns the stadiums where many of
those teams play. As a result, some sectors of the company could
weather the storm of a pandemic better than others.

“Broad as this portfolio may seem, Comcast’s live entertainment
portfolio will likely take a major hit multiple times as losses at
live venues, management services and ticket sales will exponentially
hurt the company’s overall bottom line,” noted Jordan.

“The pandemic will test the holding company’s mettle as the digital,
tech and media services will need to support the declining industries
for some time,” he suggested.

However, few tech businesses have that level of diversification.

“Those that rely on a physical presence component without a standalone
digital revenue stream may be at a severe disadvantage,” observed
Jordan. “For this reason, companies that are already down a ‘digital
transformation’ path will also have an advantage over those who
haven’t started.”

Can Tech Weather a Recession?

With global stock markets on a roller coaster that has seen more record drops and fewer rocket-like rallies,
the world very well could face a serious economic downturn. The question is whether the tech world is poised to handle it.

“Globally, there is the possibility of an economic downturn or
recession because of the loss of business opportunities, the shortage
of supplies, the cancellation of events, the inability to meet
contracts, and the loss of employees or work time,” suggested Catherine
A. Allen, chairman of
The Santa Fe Group, a third party risk management firm.

“Everything from travel to hospitality to restaurants to events to
sporting and entertainment venues will be impacted, in addition to
manufacturing and retailing. If people stay home, it impacts the
economy,” she told the E-Commerce Times.

“In the U.S., our economy is so dependent on consumer spending we may
see not just a downturn due to supply chain risk, but also loss to
retailing, hospitality, travel, entertainment, food service and other
areas,” Allen added.

The pressing question is how long COVID-19 will remain an issue. The
longer it takes for the virus to run its course, the more severe the consequences will be.

“In the short term, clearly the economic losses are going to be
significant to what is one of the country’s most vibrant sectors,”
said Alan Fyall, Ph.D., associate dean of academic affairs at the
College of Hospitality Management
, University of Central Florida.

“However, over the past two decades the travel, tourism and
hospitality industries have always rebounded from economic shocks and
natural or man-made crises, with their capacity for innovation to
overcome disruption well respected,” he told the E-Commerce Times.

“The challenge with the coronavirus is in not knowing how long it is
going to last, with it being such an unprecedented and hopefully
once-in-a-lifetime event,” Fyall said.

“Yes, technological options
exist, with many new tech innovations likely to surface to meet new
needs and offer new experiences,” he added. “However, one lesson from previous
shocks is that the leisure and business traveler still prefers that
face-to-face encounter or real-life experience in numbers sufficient
to suggest that the future is bright.”

Peter Suciu has been an ECT News Network reporter since 2012. His areas of focus include cybersecurity, mobile phones, displays, streaming media, pay TV and autonomous vehicles. He has written and edited for numerous publications and websites, including Newsweek, Wired and
Email Peter.

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