The severity of Apple Inc.\u2019s challenges amid the Covid-19 pandemic is starting to become clear. And it\u2019s not looking great.<\/p>\n
The reports covering the prospects of an\u00a0iPhone delay are piling\u00a0up. Last month,\u00a0Nikkei reported<\/strong><\/a>\u00a0Apple was considering putting off the introduction of\u00a0its 2020 iPhones.<\/p>\n Bloomberg News then\u00a0said<\/a><\/strong>\u00a0the new iPhones could be launched a few weeks later than normal due to the disruptions caused by the coronavirus.<\/p>\n And Monday, the\u00a0Wall Street Journal<\/a><\/strong>\u00a0reported\u00a0the company will push back the mass production of its upcoming iPhones by roughly a month, against\u00a0the backdrop of weaker demand and supply-chain issues in Asia.<\/p>\n The Journal\u00a0also noted Apple plans to cut the number of handsets it manufactures in the second half of 2020 by as much as 20%.<\/p>\n The timely launch and availability of new\u00a0iPhones are critical for Apple. For all the talk about how the company is shifting its strategic focus to services and subscriptions, it is still powered by its hardware business.<\/p>\n In its last quarterly report, the iPhone segment accounted for 61% of Apple\u2019s revenue, versus just 14% for services. And of course, every new smartphone sale represents a potential services buyer in the future.<\/p>\n Delays may unavoidable, though, as shelter-in-place orders and travel restrictions impede the ability of Apple\u2019s\u00a0engineers to work directly with its suppliers and phone assemblers in Asia. Key processes such as testing and prototyping that are required in designing new phones simply do not work as well over video conference.<\/p>\n Moreover, the intricate collaboration is all the more important this time around because it will be the first year Apple releases 5G-enabled iPhones, which require significantly higher engineering demands versus the incremental annual upgrades of the past.<\/p>\n On top of any production snafus, the other major problem for Apple is demand-related: Consumers may put off phone purchases in the more uncertain economic environment. At the end of the day, iPhones are a consumer discretionary luxury \u2014\u00a0\u00a0a want-to-have rather than a need-to-have.<\/p>\n iPhone owners holding onto their phones longer is one of Wall Street\u2019s biggest worries for Apple, with some analysts now projecting the average iPhone replacement cycle will now extend beyond four years.<\/p>\n And it makes sense. If you\u2019re fretting about your job security, the last thing you\u2019re going to do is buy a new $1,000 phone when your current phone works fine.<\/p>\n Wireless companies are already seeing the shift to a lower level of\u00a0smartphone upgrades. Last week,\u00a0AT&T Inc. said<\/a><\/strong>\u00a0it saw a \u201crecord low\u201d\u00a0in the percentage of its customers who have upgraded their smartphones for a quarter. Verizon Communications Inc. also saw a more than 40% decline in upgrades during the four-week period ended\u00a0April 15.<\/p>\n While a big part of the declines may reflect the fact that\u00a0wireless storefronts were closed, personal-finance issues had to have played a large role as well.<\/p>\n Tech earnings are in the spotlight this week, and Apple likely won\u2019t\u00a0be alone in discussing the latest coronavirus implications for\u00a0its supply chain and future sales.<\/p>\n Earlier this month, Amazon.com\u00a0Inc. CEO Jeff Bezos talked\u00a0in his annual letter to shareholders<\/a><\/strong>\u00a0about how the pandemic has put severe stress on its suppliers and delivery networks, forcing the e-commerce giant to make some arduous choices.<\/p>\n Both companies are slated to report their latest results on Thursday, and both will likely have more to say.<\/p>\n The severity of Apple Inc.\u2019s challenges amid the Covid-19 pandemic is starting to become clear. And it\u2019s not looking great.<\/p>\n","protected":false},"author":341034,"featured_media":326643,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"idle","_sma_x_autopost_error":"","_sma_x_post_id":"","_sma_facebook_post_id":"","_sma_instagram_post_id":"","_sma_threads_post_id":"","_sma_x_attempts":0,"footnotes":""},"categories":[17934],"tags":[64347,605,1125,61148],"class_list":["post-349639","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-smartphones","tag-2020-iphone","tag-apple","tag-iphone","tag-iphone-12"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/349639"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341034"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=349639"}],"version-history":[{"count":1,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/349639\/revisions"}],"predecessor-version":[{"id":349641,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/349639\/revisions\/349641"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/326643"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=349639"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=349639"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=349639"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Now read: 5G iPad Pro launch delayed until 2021 \u2013 Report<\/a><\/h3>\n","protected":false},"excerpt":{"rendered":"