Over the past few months, the COVID-19 pandemic has upended many lives and businesses on an unprecedented scale. However, if there is one sector that has emerged stronger from this event, it would be the cloud computing industry.
From Facebook recording surges beyond what it normally experiences during New Year’s Eve to Netflix reporting twice as many new subscribers as expected this quarter, it’s clear that the Internet – and its surrounding ecosystem – has become more valuable than ever.
To that end, let’s take a look at how the rapidly escalating COVID-19 pandemic has affected the cloud industry and how providers are responding to the sudden uptick in demand and interest for infrastructure.
Productivity Away From the Desk
With physical interaction no longer being an acceptable form of communication in light of social distancing efforts, enterprises and institutions around the world have made a sudden shift to digital solutions in a bid to retain productivity. Furthermore, many developed nations, including most of the US and Europe and Latin America, are now requiring employees at non-essential businesses to work remotely for an indefinite time frame. Schools and universities are also leveraging video conferencing and online learning platforms to facilitate distance learning through live or recorded lectures.
As a result of all these factors, it’s not surprising to see collaborative solutions, including the likes of Slack, Webex, Hangouts, Teams, and Zoom, report record-breaking growth figures over the past few weeks. According to a Microsoft blog post from March, its Teams collaboration product saw a monthly usage spike of 775% in Italy shortly after stay-at-home orders were issued across the country. The company’s virtual desktop offering saw a smaller 300% usage bump as well.
Delivering to the Needs of Millions
The entertainment industry, meanwhile, has also witnessed a huge boost from individuals self quarantining or under lockdown. The closure of movie theaters has caused many to flock to alternatives such as Netflix, Youtube, and Amazon Prime Video, the former of which saw its app downloads jump at least 60% in Italy, 30% in Spain, and 9% in the United States.
Other forms of media such as video games have also been surging in popularity. According to American telecom giant Verizon, video game usage during peak hours had shot up by approximately 75% a mere week after the quarantine was imposed.
Consumer spending on digital game purchases also reportedly increased by 11% year-over-year from March 2019, according to Nielsen’s SuperData Research. Finally, in early April, Amazon’s video game live streaming platform Twitch reached a new all-time high record of 1.7 million concurrent viewers in a single game
These surges for entertainment options have left many ISPs globally struggling to cope with the increased traffic. To that end, EU and American regulators petitioned popular streaming platforms, including Netflix, Amazon, and YouTube, to temporarily reduce the quality of their streams for high definition content.
The e-commerce boom
E-commerce is another industry that is scaling upwards in this time of crisis, as millions of individuals around the world flock to platforms such as Amazon to procure groceries, daily essentials, and medical supplies. According to a survey by Nielsen, trends indicate that consumers will move their shopping online as they attempt to voluntarily distance themselves from others for the foreseeable future.
On the first days of lockdown in any city or country, the e-commerce platforms from small and medium firms suffered performance and stability issues, most of the time caused by scalability limitations or data center designs, but quickly most of them moved to cloud environments to support the surge of usage.
Not only grocery stores had improved their eCommerce presence, but also shops, restaurants, and hardware stores moved quickly to have an online presence and delivery options.
Growth Opportunities for Cloud Service Providers
It is worth noting that giants such as Amazon Web Services, Google, and Microsoft derive much of their revenue and growth from not only their respective cloud businesses but also supplementary services such as e-commerce and software licenses. As a result, it remains highly unlikely that COVID-19 will impact the bottom line of these companies to any significant degree.
Also, the disruption on global trade markets for small, medium and big companies will impact on the delivery of hardware and service part for traditional data centers, in this scenario the volume economy of players like Amazon has a clear advantage on the infrastructure maintenance and upgrade.
One thing is clear though – companies from other industries are now starting to realize the benefits and value of cloud computing, even beyond the immediate need for remote work generated by COVID-19 this year. As a result, it’s likely that many businesses will begin scaling up their digital transformation efforts and invest heavily in IT and cloud resources in the coming years.
While the end of the pandemic remains elusive, businesses and individuals are finding a workaround the required quarantine and social distancing practices through technology, the recent advances of which have probably prevented the world from coming to a complete standstill. While the cloud may have been a frivolous expense for many companies a decade or two ago, its necessity today is indisputable.
