Big Tech Could Emerge From Coronavirus Crisis Stronger Than Ever

From The New York Times:

Amazon is hiring aggressively to meet customer demand. Traffic has soared on Facebook and YouTube. And cloud computing has become essential to home workers.

Amazon said it was hiring 100,000 warehouse workers to meet surging demand. Mark Zuckerberg, Facebook’s chief executive, said traffic for video calling and messaging had exploded. Microsoft said the numbers using its software for online collaboration had climbed nearly 40 percent in a week.

With people told to work from home and stay away from others, the pandemic has deepened reliance on services from the technology industry’s biggest companies while accelerating trends that were already benefiting them.

Amazon has muscled in on brick-and-mortar retailers for years, but shoppers now reluctant to go to the store are turning to the e-commerce giant for a wider variety of goods, like groceries and over-the-counter drugs.

Streaming services like Netflix have dampened box office sales for movies in recent years. Now, as movie theaters close under government orders, Netflix and YouTube are gaining a new audience.

Companies were already dumping their own data centers to rent computing from Amazon, Microsoft and Google. That shift is likely to speed up as millions of employees are forced to work from home, putting a strain on corporate technology infrastructures.

Even Apple, which once appeared to be among the American companies most at risk from the coronavirus because of its dependence on Chinese factories and consumers, appears to be on good footing. Many of Apple’s factories are nearly back to normal, people are spending more time and money on its digital services, and on Wednesday it even released new gadgets.

“The largest tech companies could emerge on the other side of this much stronger,” said Daniel Ives, managing director of equity research at Wedbush Securities.

. . . .

[W]hen the economy does eventually improve, Big Tech could benefit from changes in consumer habits. And despite more than 18 months of criticism from lawmakers, regulators and competitors before the pandemic hit the United States, the biggest companies are likely to finish the year stronger than ever.

. . . .

Michael Crowe of Charlotte, N.C., ordered groceries from Amazon for the first time a few days ago because he didn’t want to risk going to a supermarket, he said.

“I could see myself doing it longer term when this is over,” said Mr. Crowe, 36, who works for the home improvement retailer Lowe’s.

As more customers try different Amazon services, they may create permanent shifts in buying habits, said Guru Hariharan, a former Amazon employee and the founder of CommerceIQ, a company whose automation software is used by major brands like Kellogg’s and Kimberly-Clark.

In a blog post last week, Dave Clark, Amazon’s senior vice president of worldwide operations, said it was adding the new jobs at its U.S. warehouses and delivery network because “our labor needs are unprecedented for this time of year.”

One reason for Amazon’s increase in demand is that shoppers are buying a broader variety of goods. From Feb. 20 to March 15, over-the-counter cold medicine sales rose ninefold on Amazon in the United States from a year earlier. Dog food orders increased 13-fold, and paper towels and toilet paper sales tripled, according to CommerceIQ.

Link to the rest at The New York Times

4 thoughts on “Big Tech Could Emerge From Coronavirus Crisis Stronger Than Ever”

  1. My favored grocery store offers internet buying which store personnel pick out and bag and bring out to your car at a designated time after being prompted by a text message. Spend over $100 (not hard these days) and that service is free. I use it, but this last week I noticed that the pickup slots were booked an entire week in advance, which is not typical. A store employee told me that they are doing 3 to 4 times the normal business with that service and are hiring pickers like crazy in all the stores.

    It also seems like everyone I talk to is using Zoom and Webex. My kids spend the morning in class using Google Hangouts Meet. These services have always been there, but the adoption is exploding.

    • The grocery chain that has a number of local stores announced that Tuesday mornings from 7 – 8 AM would be reserved for seniors 65+.

      So, I drove down there at around 7:15. It was an example of unexpected consequences from good intentions. The parking lot was 100% full, and cars had taken over the adjacent bank and Starbucks lots.

      A cop was stationed outside to enforce the 65+ rule, but I didn’t really see any violations. Four store employees outside were trying to get seniors matched up with shopping carts. A clog of people had developed in the vestibule, and a look inside showed the store was packed with people and carts.

      So, after non-stop messages about avoiding crowds, the most vulnerable age group was stuffing themselves into a crowded grocery store. It was a big crowd, in a confined space, in close quarters.

      I left, and came back later in the day. Half the parking slots were taken, and far fewer people of all ages were in the store.

  2. There is one change that almost certainly will stick and it is just starting:
    Day and date digital release of (non-blockbuster) movies.
    Right now the release is forced by the closure of the theaters.
    But down the road…

    The genie of day-and-date is out of the bottle. For good.
    The studios now have real data on how a brand new theatrical release can sell at $20.
    The studios rely on a cascade of distribution windows: theaters, digital sales, disk sales, digital rentals, streaming, network… A movie that underperforms at the box office can still turn a life cycle profit on the secondary channels. And now day-and-date offers a new, early option.

    The thing is the studios are releasing these new movies through the existing sales/rental channels (Amazon, XBOX, iTunes, etc) but most of them are setting up their own subscription services. It would be trivial to add a section for day-and-date releases. Unlike theatrical, there would be no distributor sharing.

    The theaters would gripe but the strategy makes no sense for blockbusters, so they still get those exclusively. Other movies (horror and faith-based) have a social component to tbeir early box office so a two week theatrical run would serve.

    The big gain is tbe mid budget movies that have limited theatrical runs anyway.

    Plus: the studios are investing in low and mid-budget movies for exclusive release on their streaming services. Making them day-and-date free on the subscription *and* giving them a simultaneous two week theater launch run would give theaters *more* new content and since those kinds of movies don’t have extended runs anyway, its a three way win. Studios and theaters get more content out and consumers get more choice: subscribers watch free and non-subscribers get PPV or in theater for a limited time. After that, it goes to the existing channels.

    The studios have long thought of simultaneous digitial/theatrical releases but they feared annoying the theaters. Now they have a (forced) test. Given the increased use of streaming and digital rentals from the lockdown, projected as high as 60% by nielsen, they may find they like tbis new channel.

    I’m betting they’ll modify their cascade to make room for it. Mainly because the gaming world is already doing day-and-date digital/disk and it’s working fine for them.

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