This thought crossed my mind this morning. Stopping for a second and trying to look at the new world around us, I suddenly realized that everything can change .. If it has not already changed. In connection with the coronavirus pandemic, the world order is beginning to change across the planet, whether we like it or not. Major companies shut down their factories; people, although they have not yet been fired, are already sent on paid (or not) vacation; someone is transferred to work at home, and someone does not go to work at all because of fear for their life and the lives of their loved ones. In such a situation, large companies stop thinking about development and begin to rebuild their business model in order to get out of the crisis with the least losses for themselves. But this is only part of why it seems to me that we will have many years of stagnation in the development of technology in the user segment and why the word 'flagship' may soon take on a different meaning.
Buying flagships is too expensive
Coronavirus panic
It's all about human psychology and the rethinking of life values. Now, when many cities and countries are in complete or partial isolation, a person begins to feel on himself what he has never felt before. We were not ready for such a turn of events and part of the world is beginning to panic. People are buying up essentials, toilet paper, food that does not deteriorate for a long time, and other things that they think will be useful during a pandemic. Despite the fact that the governments of all countries declare that there will be no problems with food, this does not stop citizens in all countries of the world from sweeping off the shelves everything that has a shelf life of more than a week.
“Don't panic.” These words make me panic even more
I do not judge anyone, in any case. In the current situation, everyone must decide what to do in order to avoid the consequences of the impending economic crisis as much as possible. And no one has any doubts that he will be in doubt. It would be more accurate to say that it is already coming. Stock quotes and stock indexes are rapidly falling down and no one knows when they will stop. And at this moment, a rethinking of life values takes place in the minds of people. But we will return to them later.
What will happen to tech giants during the crisis
Let's talk about the largest companies in the world that manufacture and create high-tech 'toys' for us. Each Samsung code, Apple, Huawei and many more companies compete with each other in who will surprise the consumer the most. We've already got foldable smartphones, ultra-crisp screens, miniature but powerful processors and whatnot. But behind all this are years of development and billions of dollars in financial injections that companies can afford if there is a steady demand for their products.
In today's realities, when the shares of companies fell by half (if you are lucky), factories and shops are closed, and people are thinking about buying toilet paper, and not a smartphone for $ 2000 – companies cannot develop. Over time, funding will be reduced or canceled altogether for engineering groups that work on products that are expected to enter the market in 2-3 years. Companies will have to rebuild and release to the market what they will most willingly buy, and in the conditions of an economic downturn, we can only talk about the budget segment. Slightly faster response times or trillions of colors instead of a billion will no longer be considered a necessity simply because most potential buyers won't have a couple thousand bucks to buy. This is, of course, about the mass market. The flagship devices will retain some share, but whether this is enough to move the industry forward is a big question. But this is only one side of the coin, let's get back to rethinking the values of humanity.
How a person behaves during a crisis
Everything passes. And the pandemic will pass, and the economy will begin to recover. As an inveterate optimist, I have no doubts about this. When will this happen? Maybe in six months, maybe in a year, or maybe in five. I do not know. Nobody knows. But whenever that happens, I know for sure that my attitude towards consumption will change. It has already begun to change.
Let's imagine that the global economy starts showing signs of life in a year or two. After she begins to show growth, people will begin to slowly return to their usual life, however, what they have experienced is unlikely to be forgotten. When once again they are shown a folding smartphone for $ 3000, 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 did not know when it would end and whether it would end at all, as they looked at their bank account and thought 'will the bank close?', as they counted the remaining cash and were not sure that they would receive their next salary? Will such a person buy more than his income? I don’t think so. And this applies not only to ultra-expensive smartphones, but also to 'ordinary' flagships. Is the newest iPhone 11 PRO or Samsung Galaxy S20 Ultra worth the money? For sure. But whether we are ready to spend it, given what we have experienced over these two years, is an open question.
Everything passes and this will pass…
What will happen after the cancellation of the pandemic
The human psyche is designed in such a way that over time we stop remembering something bad, which allows people not to go crazy. But how long will it take until the moment when we again will mindlessly spend money being confident in the future? At what point will humanity stop expecting another pandemic and begin to move the economy forward by spending money, and not saving it 'for a rainy day'. Years 5? Maybe 10? Probably. Until then, major flagship device manufacturers will have to think three times about how to invest billions in something that is likely not to bring them profit. After all, speaking honestly, a smartphone for 100,000 rubles. not so different from a smartphone for 30,000 rubles. Well, by and large, right?
But in the end everything will work out, I'm sure! Let's speculate in the comments or in our Telegram chat on this topic.