Two weeks after I wrote that coronavirus fears — not the virus itself — could seriously damage the tech industry this year, the world is officially in the midst of a full-blown panic over COVID-19. Back then, 82,000 people had been infected and 2,800 had died; today, nearly 112,000 people have been infected and 3,900 have died. Additionally, at least a dozen tech events have been cancelled, travel restrictions have become more numerous, and multiple companies have asked employees to work from home rather than gathering in offices. We’re not yet at the end of this cycle, either.
Given the heartbreaking human costs, it’s hard to focus on the coronavirus’ 94% survival rate, the fact that more people have now recovered than currently have it, or on its impacts on the tech sector. But since two of my beats are Apple and 5G, I feel obliged to examine the virus’ likely impact on the first 5G iPhones, devices that are expected to expand consumer adoption of high-speed 5G cellular technology and, consequently, influence rollouts of 5G networks in several countries.
If you’ve followed Apple’s efforts to bring its first 5G iPhone to market, you know the road has been winding and bumpy. While virtually every other smartphone maker picked Qualcomm’s 5G modem and antenna solutions, Apple backed an Intel 5G modem project that was delayed and ultimately cancelled. Then, after making an eleventh-hour deal to use Qualcomm’s modems, Apple reportedly decided to use another company’s antennas, adding another round of last-minute engineering hurdles ahead of manufacturing.
Recent reports suggest that the coronavirus situation has added another wrinkle: Travel restrictions have supposedly precluded Apple engineers from finishing tests required before 5G iPhone manufacturing can commence. Though “new iPhone will be delayed” reports like this come out every year and often amount to nothing, they’re sometimes true, and this one’s easy to believe given the coronavirus’ established disruptions. The latest prediction is a one- to two-month delay for the new iPhone models, which if accurate would push them from their standard September release into October or November.
This could have some impact on Apple and Apple supplier earnings, as new phone revenues would otherwise begin at the end of the third calendar quarter before growing dramatically during the holiday quarter. Assuming Apple manages manufacturing delays as it has in the past, some countries will wait longer than others to get the new phones, and as Apple executives tend to say, “demand could continue to outstrip supply” for months in countries where the devices are supposedly available for purchase. In other words, Apple devotees will have to wait even longer to get access to 5G technology, which Android early adopters have been using since early last year, with a mix of whoa, nice, and hmm results.
Will a 5G iPhone delay have broader implications for the mobile industry? I suspect the answer is simultaneously yes and no. On one hand, there’s every reason to believe that the mobile industry will now miss analysts’ 2020 sales targets, which projected 0-1% unit sales growth this year, since 4G and 5G iPhone demand was expected to contribute significantly to keeping industry-wide sales at least flat. This will consequently be a slower year for smartphone sales than was previously hoped.
But on the other hand, a brief iPhone delay is unlikely to slow down 5G network build-outs, if it has any impact on them at all. I mention that because some of Apple’s most ardent defenders have claimed that 3G and 4G networks really didn’t matter to customers until iPhones arrived to take advantage of them, and there’s admittedly some evidence to back up that claim. Almost no one can name the 3G and 4G smartphones that arrived before Apple introduced the iPhone 3G or the 4G-capable iPhone 5. Moreover, U.S. carriers openly said ahead of the iPhone 5’s launch that they were bracing their networks for additional demands, as iPhone users tended to disproportionately gobble up data.
Putting aside how Android smartphones and networks have evolved since then, it’s worth noting that network build-outs are planned many months if not full years in advance, and even a two-month iPhone delay would neither eliminate the need for new 5G tower hardware nor reduce the pressure on U.S. carriers to have nationwide networks available in time for the launch. There’s also plenty of demand for 5G devices from carriers outside the U.S., including China and South Korea — each home to multiple fully functional 5G networks — and Japan, which is about to launch its first 5G network ahead of the Olympics, with similar networks growing in parts of Europe and Australia, as well.
While U.S. customers might not be thrilled with their 5G network options or performance at this point, all three of the major carriers have promised major improvements this year. Outside the U.S., a combination of markedly faster network speeds and falling handset prices have bolstered demand for 5G devices, helping Samsung and multiple Chinese vendors in the process. 5G network buildouts are continuing across the world, led by companies such as Ericsson, Nokia, and Samsung, as Huawei continues to have a role in some countries.
(Thus far, the coronavirus doesn’t appear to have had as much of an impact on handset rivals’ manufacturing as on Apple’s, but that could be attributable to less vendor disclosure, smaller production scale, or both. The situation with 5G base station manufacturing was something of a question mark even before the coronavirus hit China, and it remains fuzzy today.)
So there’s a good chance that many major countries will have 5G networks in place for the iPhone launch. The question is whether Apple will be able to deliver devices for them. As I said three weeks ago, when it appeared that Apple might be cutting things too close with 5G iPhone production, risking a slow start to manufacturing:
That might be enough to restrict initial supplies of the affected iPhones and possibly create the sort of regional and model-specific availability challenges we haven’t seen in some time. And that’s assuming there’s no last-minute or post-launch snafu with antenna performance … all it would take is some undiscovered glitch in design or manufacturing to mess up 5G performance, seriously undercutting the iPhone’s speed and parity compared with Android rivals.
At this point, I hope that the new iPhones deliver a breakthrough 5G experience that’s worth all the reported extra wrangling. It would be a shame if the first 5G iPhones merely deliver feature parity with Android devices released much earlier. Regardless of how the most die-hard iPhone fans react, other users may realize that they didn’t gain much by waiting on Apple’s solution, putting Samsung and its other competitors in a stronger position to capitalize on future major technology transitions. But if the iPhones bring their A game this year and show up on time, 2020 could end on a happier note than where we all are right now.
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