How will coronavirus affect the next iPhone?

iphone-xr-iphone-11-cameras-100811766-orig.jpg

iphone-xr-iphone-11-cameras-100811766-orig.jpg

Credit: IDG

Coming off the back of last year’s iPhone 11 and the phenomenal iPhone 11 Pro, Apple looked to be on the top of rivals yet again. However, the impacts of coronavirus on the manufacturing supply chain and on the appetites of consumers for luxury electronics might lead to major disruptions for the company’s next wave of flagship hardware. 

To be clear, at this stage, Apple hasn’t formally set a date for the reveal or launch of the next iPhone however. That’s not unusual for this time of year. However, the circumstances surrounding that silence are a little different this time around.

China closed factories in response to the outbreak of coronavirus back in February. Though undoubtedly critical in relation to helping mitigate the spread of the virus, this move is going to have a huge knock-on impact for pretty much every brand in consumer electronics. 

Even if products like the iPhone aren’t entirely built in China, critical components are. As long as supply for those components is unavailable or limited, that’ll hold up the entire process of assembly. You can’t build a house without nails. In addition, the sheer production volume that China brings to the table is critical for companies like Apple. 

iphone-11-pro-buttons-100811747-orig.jpegCredit: Jason Cross/IDG
iphone-11-pro-buttons-100811747-orig.jpeg

Launching a flagship product like the iPhone 11 doesn’t happen overnight. There’s a lot of preparation that takes place in the months beforehand in order for Apple to achieve their thrifty two-week turnaround from announcement to retail launch without stock shortages. 

Ordinarily, the launch of a new Apple product is a well-oiled machine. This time around, it’s anything but. The blueprint for Apple's next flagship might be done and dusted but the road to mainstream markets is full of potential potholes.

Many factories in China remain closed until April and those that have reopened are still recovering from the effects of the pandemic. According to The New York Times, many of these Chinese factories are only operating at 50-60% efficiency.  It’s going to be a long while before the supply chain that Apple relies upon is working at its prior levels of efficiency and productivity. What’s more, it’s hard to imagine Apple not passing those extra costs of production on to consumers.

According to David McQueen, 5G Devices Research Director at ABI Research, “The ripples from China will be felt globally.” 

He claims that, in addition to a weakened development of next-gen products and softened demand for 5G phones, ”the market will also be faced with numerous disruptions and delays, most notably the launch of Apple’s first 5G iPhones that are due to appear in September 2020.”

“No sooner had 5G smartphones started to gain some traction and break into the market in significant numbers, than the outbreak will now trigger a suppression of its near-term growth, pushing out the development and introduction of affordable 5G phones.” 

It’s hard to take these extraordinary circumstances and turn them into a number that accurately measures exactly how Apple’s presumed timeline for a late-year launch will be hit.  However, it only takes a delay of a month or two to push the device past Christmas and the all-too-valuable holiday season. Timing has always been a big part of Apple’s recipe for success and it's possible that the iPhone 12 could be pushed to even late-2021 in order to ensure optimal market conditions for its launch. 

Of course, that’s assuming demand for new iPhones persists in a post-coronavirus world at all. 

Even once that supply chain does get reconstructed, there’s the issue of deflated consumer demand to content with. Though entirely secondary to the death toll of the disease itself, tens of thousands of people have already lost their jobs as a result of the COVID-19 outbreak. Right now, it’s a bad time to be selling uber-expensive luxury-grade smartphones and it’ll take far more than a few months for that situation to recover.

Apple says that the new Magic Keyboard’s “floating” design will let the new iPad work better on a lapCredit: Apple
Apple says that the new Magic Keyboard’s “floating” design will let the new iPad work better on a lap

Still, if the recent reveal of the new Macbook Air and iPad Pro are anything to go by, Apple remain keen to engage and court the dollars of the converted - pandemic or no.  Apple survived the GFC and I’ve little doubt that I'll survive coronavirus too. Nevertheless, it’s likely that the next iPhone will face an uphill battle when it comes to winning the wallets of Australian consumers. 

Already, coronavirus has seen the value of the Australian dollar plummet and tens of thousands lose their ability to earn an income. Even if Apple doesn't actively look to position the next major iPhone as a premium and pricey upgrade over the iPhone 11 Pro, it’s still probably going to cost a lot more to the contracting market of consumers ready and willing to afford the expense. 

We’ll have to wait and see exactly how coronavirus specifically affects the launch of the new iPhone but, even at this stage, it’s clear the pandemic has the potential to force Apple out of its comfort zone. Historically, that’s something that produces mixed and unexpected results for consumers.

Ultimately, if you’re someone who was looking forward to the iPhone 12, no news is bad news. The next iPhone probably won’t arrive on time, it’ll probably cost more than expected and any success that Apple finds with it will certainly be overshadowed by the larger circumstances in which it was made.  

iphone-11-models-100824669-orig.jpgCredit: Apple
iphone-11-models-100824669-orig.jpg

 

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Fergus Halliday
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