North American Retail and Restaurant Visits Dropped 100% in March 2020

These bits of data from Prodco Analytics and OpenTable, reported by the Wall Street Journal, graphically illustrate the effects of Covid-related retail shuttering. Retail visits in North America fell off a cliff in March 2020, reaching a negative 100 percent by the end of the month, while visits to restaurants likewise fell 100 percent about the third week of March 2020. 

That could hardly be anything but the case after all restaurants, bars and nearly all retail locations were ordered shut by government order in March 2020, in most jurisdictions. 

source: Wall Street Journal

Small businesses will be severely challenged to come out the other side, and many will likely not make it at all. Unprecedented.

Post-Pandemic Service Provider Growth Rates Might Vary

Nobody yet can predict how consumer behavior could change after the end of the Covid pandemic. If past behavior in the aftermath of major global recessions applies, connectivity providers will see revenue impact based on underlying growth trends in each market.

Developing markets might make a relatively-swift rebound after a modest dip, might see flat revenue or possibly even grow, but only at a slower rate. Service providers in developed markets arguably face more risk, in some regions. 

“From 2007 to 2009, many European operators’ average revenue per user dipped by more than 15 percent, and churn rates rose by the same amount for operators in both North America and Europe,” say consultants at McKinsey. 

Revenue and profits in North America are stronger, so there might be relatively slight impact. 

source: McKinsey

The Organization for Economic Cooperation and Development countries, on the other hand, saw only a one-year flattening of growth in the wake of the internet bubble in 2001, but saw sustained, multi-year drops in revenue after the great recession of 2008, likely for reasons not related directly to the economy. 

source: OECD

But some data suggests global revenue after 2008 was buoyed by growth in developing markets, even if some developed markets did not recover as quickly. - 

source: IDATE

Smartphone sales are likely to suffer in the near term, however.

It could hardly be otherwise when major parts of the economy are simply shut down, supply chains have been disrupted and on top of that we must work through an unprecedented planned effort by governments to throw economies into recession.

Smartphone sales globally dropped 40 percent in February 2020, for example. CCS Insight now predicts that phone sales worldwide will drop to a ten-year low in 2020 overall. 

Sales of 1.26 billion smartphones sold globally in 2020 would represent the lowest sales in a decade. The global mobile phone market is expected to slow by 13 percent in 2020, with shipments in the second quarter of the year predicted to fall by 29 percent, CCS Insights predicts. 

source: CCS Insight

Will Pandemic Behaviors Persist?

It is to be expected that consumer behavior in unprecedented times will feature at least temporary aberrations. It could hardly be otherwise with much of the economy shut down and people living through a pandemic.

The big issue is whether--and to what extent--those behaviors might persist, on a permanent basis. Some would argue the great recession of 2008 caused permanent changes of behavior, and we might see greater changes for health reasons after the Covid-19 pandemic. 

Looking at U.S. consumer spending about seven years after the start of the 2008 recession, Macy’s executives noted a “permanent” shift to automobiles, housing, health care and digital experiences. 

Leisure travel, dining out and attending events (experiences) also gained favor. A general increase in buying based on “value” also arguably occurred. A decade later, many of those trends of spending caution still seemed to be in effect. 

To be sure, there are other trends not directly related to post-recession thinking: a shift of retail to digital channels, environmental, “buy local,” socially-responsible behavior and organic product trends. Many have noted the preference for experiences rather than goods.  

Looking only at content consumption, the pandemic has boosted use of, and interest in, media of all types. 

source: Nativo

Daytime viewing is overtaking primetime for ratings numbers, according to Samba TV. Daytime viewing numbers are up 121 percent year over year and total viewing time is up 85 percent. Viewing of cable news has also seen a sharp uptick between the hours of 9 a,m, and 4 p.m. as well.

Nobody expects those trends to persist once people go back to work and school. Virtually everybody seems to expect a permanently higher level of online shopping. Some believe a permanent shift in remote work is possible, with a shift of significant higher education to online delivery as well.

A reasonable baseline case is that underlying trends in place before the pandemic become stronger. Even the hard-hit activities that involve larger gatherings of people, travel and lodging are going to recover, albeit with interaction precautions likely persisting in some ways. 

Supply chains already were changing, prior to the pandemic. That likely is a permanent shift. But that trend was underway before the pandemic. Disaster preparedness will improve, though. History suggests many far-reaching potential changes are unlikely to happen. But pre-pandemic trends are likely to accelerate. 

Nokia Argues 4th Industrial Revolution Will Lift Productivity

Nokia argues that the fourth industrial revolution will boost industrial productivity, which Nokia rightly notes has been less than one percent per year since 1980. Nokia argues that industry 4.0 is going to boost productivity, built on “connecting everything” and using the internet of things. 

Private networks using 4G can help firms get a head start, Nokia argues, even before native 5G is available. One would expect Nokia to say that. 

The key issue, though, is whether more information technology--private 5G, private 4G or public 5G, is going to show early productivity results when 40 years of IT investments have failed to move the needle. 

If you have worked on the supplier side of the business, you know buyers almost never believe such claims, in terms of magnitude of benefit. 

Historical data since at least 1971 helps explain that skepticism. Though other forces are at work, it is hard to quantify the benefits of IT deployments, and probably also will be true of other promising “digital business transformation” efforts as well. 

Since 1971, for example, productivity has generally been dropping in developed nations, for example. There are mitigating issues, many will argue.

Cloud Giants, ISPs, IXPs Collaborate for Routing Security

Amazon, Google, Facebook, Microsoft, Akamai, and Netflix and more than 100 Internet service providers and internet exchange points  have joined the Mutually Agreed Norms for Routing Security (MANRS) initiative, designed to reduce the most common routing threats, such as traffic hijacking and spoofing. 

Microsoft Sees 775% Increase in Cloud Services Demand

Microsoft says there has been  a 775 percent increase in demand for its cloud services in regions enforcing social distancing and/or shelter-in place due to the COVID-19 coronavirus. Use of the collaboration tool Teams spiked up to 900 million meeting and calling minutes daily in a single week, for example. Windows Virtual Desktop usage has grown more than three times. .

Government use of public Power BI data visualization software to share COVID-19 dashboards with citizens has surged by 42 percent in a week, Microsoft says. So how are global access networks holding up? 

Despite significant increases in internet access demand caused by stay-at-home policies forced by the Covid-19 pandemic, global internet access performance is holding up. There are some speed reductions, but average speeds arguably are higher than four months ago, in many markets, including Australia.

Speeds are flat in Canada, the United States, Mexico, Japan and Malaysia; slower in India; higher in China. 

source: Ookla

Why IT Buyers Almost Never Believe Seller Claims

Every supplier of an information technology solution argues that deploying those solutions will boost productivity. Sometimes revenue gains are the claim. Perhaps more often operating cost savings are the bait. If you have worked with sales teams, you know that buyers always are skeptical of such claims. 

Historical data since at least 1971 helps explain that skepticism. Though other forces are at work, it is hard to quantify the benefits of IT deployments, and probably also will be true of other promising “digital business transformation” efforts as well. 

Since 1971, for example, productivity has generally been dropping in developed nations, for example. There are mitigating issues, many will argue. 

The hype might have exaggerated real-world impact. Reaping rewards takes longer than we think. Others argue that we cannot measure productivity boosts when it is “quality” that changes (more output from machines that cost the same, or perhaps less, but have higher performance). 

Other forces might counteract the productivity gains, perhaps because more work happens that is essentially overhead, without direct productive effect (tax, regulatory, compliance efforts, for example) or workers might be shifting from high-productivity to sectors of the economy with lower productivity. 

source: Dezernatzukunft

The point is that buyers almost never actually believe the more-spectacular seller claims.