SINGAPORE (Apr 3): As pandemic-induced lockdowns enter their fourth week in some parts of the US and Europe, the focus is turning to what the world would look like in the aftermath of Covid-19. “During turbulent times, innovation gains traction,” says Catherine Wood, chief investment officer of ARK Invest, a New York-based tech-focused asset management firm. “Consumers and businesses are willing to think differently and change their behaviour during periods of turbulence and fear.” As they look for cheaper, more productive or more creative ways to satisfy their needs, disruptive innovation takes root.
The current crisis is likely to be no different from the previous ones, which saw rapid behavioural changes, Wood argues. The global financial crisis 11 years ago, for example, pushed businesses away from buying software outright to pay-as-you-go software-as-a-service licences and consumers away from brick-and-mortar stores towards online shopping. The advent of the smartphone at the start of the 2008 crisis laid the groundwork for many a game-changing business, like the sharing economy, including ride hailing and Airbnb.
The big winners this time are likely to be the tech giants or the Apples, Microsofts, Googles and Facebooks of the world, which have huge cash piles on their balance sheets. The crisis will likely make Big Tech stronger than they have ever been. Amazon.com, the logistics and e-commerce behemoth, has emerged as a utility of sorts, delivering essentials such as toilet paper to American homes as well as groceries, household goods and books. Amazon Prime members are able to watch movies and TV serials or listen to music while confined to their homes. With same-day and two-hour delivery in place, consumers will purchase goods online more often, perhaps multiple times a day. Most of Amazon’s profits still come from its cloud services arm, Amazon Web Services.