This thought crossed my mind this morning. Stopping for a second and trying to look at the new world around us, I suddenly realized everything could change, if it hasn’t already. With the coronavirus pandemic around the planet, the world began to change, whether we want it to or not. The largest companies are shutting down their plants; people have been fired, or are sent on paid (or not) leave; some work at home, while some don’t go to work at all because they fear for their lives and those of their loved ones. In such a situation, large companies stop thinking about development and begin to rebuild their business model to overcome the crisis with the least losses. This is only part of why it seems to me we will have many years of stagnation in technology development and why in the near future the word “flagship” may take on a different meaning.
It’s all about human psychology and the rethinking of life values. When many cities and countries are in full or partial isolation, people start to feel things they haven’t felt before. We’re not ready for such a turn of events, and in part, the panic is beginning to envelop the world. People are buying up basic necessities, toilet paper, food that keeps for months and other things they think will come in handy during a pandemic. Despite that governments of all countries declared there will be no problems with food, this doesn’t stop people from buying everything that has a shelf life of more than a week.
I don’t blame anyone. In the current situation, everyone must decide what to do to avoid consequences of the impending economic crisis. Stock quotes and stock indices are flying fast and no one knows when they will stop. At this moment people are rethinking their values. But we will return to a normal life soon.
What will happen to tech giants during the crisis?
Let’s talk about the largest companies in the world that produce and create high-tech “toys” for us. Samsung, Apple, Huawei, and many more compete with each other in who will surprise the consumer more. We have already received folding smartphones, ultra-clear screens, miniature but powerful processors and much more. But behind all this, there are years of development and billions of financial injections that companies can afford if there is steady demand for their products.
In today’s reality, when company shares have fallen by half (if they’re lucky), factories and shops are closed, and people are thinking about buying toilet paper, not a smartphone for $2,000, companies cannot develop new devices. After some time, funding for developing phones that should hit the market in 2-3 years will be reduced or completely stopped. Companies will have to reorganize and market what people are most willing to buy and in an economic downturn we can only talk about the budget segment. Phones with a slightly faster response or have a trillion colors instead of a billion will no longer be considered a necessity simply because most buyers won’t be able to afford them Flagship devices will retain some share, but whether this is enough to move the industry forward is a big question. This is only one side of the coin – let’s go back to rethinking life values.
How does someone behave during a crisis?
Everything passes, so too will the pandemic and the economy will begin to recover. As an avid optimist, I have no doubt about that. When will this happen? Maybe in six months, maybe in a year, or maybe in five. I don’t know, no one does. But whenever this happens, I know for sure that my attitude to consumption will change. It has already begun to.
Let’s imagine the global economy begins to show signs of life in a year or two. After it begins to show growth, people will slowly begin to return to their usual lives, but what they experienced is unlikely to be forgotten. When once again they will be shown a folding smartphone for $3,000, will they remember how they bought cereals and pasta, how they sat at home in isolation and were afraid to go out for groceries, how they didn’t know when it would end and whether it would end at all, as they looked at their bank account and they think, “will the bank close?”, how they counted the remaining cash and weren’t sure they would receive another salary? Will people buy something they can’t really afford? I don’t think so. This not only applies to super-expensive smartphones but to “ordinary” flagships. Is the newest iPhone 11 PRO or Samsung Galaxy S20 Ultra worth the money? Surely it is, but whether we’re ready to buy it given what we have experienced is an open question.
What will happen after the pandemic is over?
The human psyche is designed so that over time we stop thinking about the bad things, which allows us to not go crazy. But how much time will it take until we will again mindlessly spend money? At what point does mankind stop expecting another pandemic and begin to move the economy forward by spending money, rather than saving it “for a rainy day”? 5 years? 10? Until then, large manufacturers of flagship devices will have to think about how to invest billions in something that is likely to not bring them profit. A $1,200 smartphone is not so different from a smartphone for $400, right?
But in the end, everything will work out, I’m sure! Let’s speculate in the comments on this topic.