Omdia Report: COVID-19 Impact on Technology Market

As IT professionals can attest, no business has been untouched by COVID-19. In the blink of an eye, all work that could be done from employees’ homes migrated there from the office. Businesses that previously relied on face-to-face communications for the majority of their internal and customer-facing interactions were suddenly mandated to institute remote communications and operations for all or nearly all of it.

These changes have had a dramatic impact on IT operations, spending priorities and plans for the future. Many of the changes won’t be relaxed until after a vaccine for coronavirus is distributed to enough of the population to build herd immunity, and indeed some of the changes will become permanent – part of computing’s new normal.

Research firm Omdia recently released a report that explores Covid-19’s impact on technology use.

Omdia analysts identified key trends that they say will cut across technology sectors during and after the pandemic. These trends involve both consumers and enterprises. Our view into the report focuses on the trends from the perspective of enterprises.

Tech Supply Chain

Omdia, which is a sister business to ITPro Today, predicts that the overall tech supply chain will benefit from renewed investment – with the notable exception of the smart device market.

On the plus side, demand for an array of digital services from employees in enforced lockdown will drive spending on the technology to support these offerings, both during and after the pandemic. 

Data center servers, for instance, hit a record first-quarter revenue number. While spending on servers in the second half of the year will likely be weaker due to falling enterprise IT spending, Omdia anticipates the server market will end the year in positive growth territory.

And high demand for digital services will be reflected in other parts of the technology supply chain, including semiconductors.

But with the global economy shrinking, smartphone sales will see a double-digit fall this year, and tablet and PCs sales will drop even more than smartphones, Omdia found. For the second half of 2020, and potentially into next year, production in important emerging markets outside of China could experience more prolonged disruptions, which will impact vendors’ ability to produce devices.

The second half of the year will continue to be challenging for the smart device industry. In emerging markets, stagnating demand will put downward pressure on the price of low-tier smartphones; in advanced markets, sales of high-end smartphones will increasingly be concentrated among certain brands.

IT Spending

Addressing another area of COVID-19’s impact on technology, Omdia expects that most businesses that have the option to postpone IT-related investment in the short term will do so. Priorities will shift and budgets will be significantly reduced, with large projects delayed.

Next year, we’ll see a new normal, one featuring increased remote working and data access, use of technology to avoid physical contact, tighter travel budgets, and increased scrutiny of return on investment. Omdia is also suggesting that there will be a focus on delivering simple, AI-led business optimization and cost reduction initiatives that can help build new revenue streams. One candidate for this transformation: intelligent robotic process automation, which is expected to have a major impact on the labor market with its promise to significantly reduce costs (and easily scale labor) by seamlessly executing entire business processes consisting of interrelated tasks. And cloud will benefit, as applications that enable digital working will continue to be used well into the future. But these new business models and channels will increase companies’ exposure to threats, leading to increased security spending.

Video

COVID-19 restrictions are undoubtedly leading more employees to make video calls than ever before.

Omdia forecasts that video will substantially contribute to a double-digit increase of internet traffic this year compared with its earlier prediction. And next year, traffic will remain high compared with Omdia’s earlier forecast. 

Enterprises will lean on video for even greater levels of collaboration as remote working continues. And companies will invest in advanced video analytics for security applications, such as facial recognition to allow contactless entry to buildings and crowd monitoring to enforce social distancing, according to the analysts.

Security

The rapid transition of the workforce from commercial offices to residential locations has presented several security-related challenges to businesses. In the cybersecurity space, network security and content security forecasts for 2020 are down, Omdia said. Network security will be harder hit because most revenue is hardware/appliance-based, according to the firm, but remote working is increasing demand for web-security SaaS and SSL VPNs. All areas of cloud security are seeing strong growth.

Even though IT budgets will tighten, security will remain a priority for businesses. Companies will accelerate their move to the cloud to ensure their IT infrastructure is dynamic, and security will have to follow, which will stimulate growth in all areas of cloud security, Omdia said.

Data privacy, meanwhile, will face challenges as offices and other business venues all try to find a new normal. There are technologies that can monitor social distancing and detect body temperature, for instance, but in the United States these techs are typically unwelcome. Some trade-offs will be made, though it’s not clear yet what those trade-offs will be.

Uptake of contactless biometric readers is expected to accelerate in access control systems as end users transition away from traditional fingerprint readers to minimize the transmission of germs.

You can gain access to the full report from Omdia here (registration required).