This post is not meant to warn you, but to know that times are getting tough for technology as well as the app economy.
Inflation is a problem in the United States and around the world, with the inflation rate in the United States approaching its highest level in 40 years. In April, the consumer price index, which measures how much consumers pay for goods and services, rose 8.3% year-on-year and 0.3% mom. The Federal Reserve has started raising interest rates and will soon start cutting its balance sheet to fight inflation and try to control prices. These measures may be necessary, but they are what worries Wall Street. Analysts at Goldman Sachs estimate that there is a 38% chance that the US economy will enter recession over the next 24 months. Deutsche Bank also predicted a recession.
Inflation in 2022 could lead some startups to skyrocket and others to collapse.
At the same time, other uncertainties weigh on investor sentiment. Russia’s war in Ukraine continues, which could exacerbate inflation, supply chain problems and fluctuating oil prices, as well as heighten a general sense of unease. A slowdown in China and concerns about the impact of Covid outbreaks are also worrisome.
The US mobile gaming industry will fall for the first time in history in the first quarter of 2022 as a consumer
spending fell 10% to less than $6 billion for the first time in a year. Consumer spending on the App Store remained stable during the first quarter of 2022. The overall decline is mainly due to the low efficiency of Google Play monetization. Consumer spending on Google Play fell 22% year-over-year, losing $655 million in gross revenue.
Android users, on average, have lower US income compared to iOS users. Inflation and the rise in the cost of living may be the reason for the decline in revenue from games on Google Play. Despite the decline in the first quarter of 2022, the US remains the leading market for mobile games. Revenues have more than doubled since the beginning of 2018.
Several tech companies have recently announced hiring freezes and layoffs. The impact can be attributed to the pandemic expansion of these companies and the expectation that it will be harder to raise capital as market valuations fall. Facebook parent company Meta is suspending hiring and cutting some hiring plans, Insider reported last week based on an internal memo it reviewed. The Meta hiring suspension is partly due to Apple’s iPhone privacy changes, which undermined Meta’s ability to target ads. Amazon’s chief financial officer told analysts on the company’s earnings that its warehouses have become “bloated” after massive hiring during massive outages that have pushed more and more consumers to shop online. Amazon is a slider that shows they are being careful because people will be more careful about what they buy.
Uber’s CEO told employees in a message received by CNBC that the company “treat hiring as a privilege and be thoughtful about when and where we recruit”adding: “We will be even more intransigent on costs at all levels.” Robinhood recently said it was cutting about 9% of its full-time staff to eliminate job duplication after a big hire. Peloton, which was a hit during the pandemic earlier this year, announced it would cut its workforce by about 20% as part of a cost-cutting measure. Celebrity video app Cameo recently announced a series of layoffs involving about a quarter of its employees.
AT&T has announced price hikes on its old mobile plans and is encouraging subscribers to upgrade to the carrier’s new unlimited plans. Although AT&T did not blame inflation in its statement, the company acknowledged the impact of an 8.5% inflation jump on its business. “There is no doubt that a large segment of goods and services is under pressure, and we are not immune from this. I don’t think anyone in the industry is immune to this, and it’s not a good position.”said CEO John Stankey.
Experts say the factors affecting the tech industry are unique to a sector that has grown rapidly throughout the pandemic and do not necessarily point to a wider downturn. If layoffs in the technology sector become more frequent, it could affect the entire economy.
Applications, regardless of category, will need to do more than just provide services. For example, it will be necessary to take advantage of personalization to reduce the time-consuming process of opening an application, onboarding should be simple and fast, especially if the choice of an application becomes critical. First Foundation Bank has launched a new mobile app that uses predictive AI to help clients consolidate data from all their accounts, as well as proactively plan and anticipate issues such as overdrafts, increasing the value proposition for clients. Those who have cleaned up their offices and everyone is working from home will get a certain advantage, especially now that we all know how to work remotely as a team 🙂