- Apr 12, 2001
The COVID-19 coronavirus outbreak has been spreading around the world since January, and so far, it has had a major impact on Apple's device production and device sales in affected countries like China, Italy, South Korea, and now, the United States.
As the virus continues to move through the United States and other countries, it could lead to production and supply problems for several months, and has caused WWDC to be held as a digital-only event for the first time. This guide covers everything that we know about COVID-19's impact on Apple.
SARS-CoV-2 is a virus in the coronavirus family that surfaced in Wuhan, China in December of 2019, and the illness that it causes is COVID-19. It is believed that the virus originated at a seafood market where exotic animal meats were sold, though Chinese scientists have suggested that it may have originated elsewhere and then spread in the market.
Genetically, SARS-CoV-2 has been found to have a similarity to coronaviruses in bats, which is the animal it may have originated from, though researchers believe a secondary animal such as a pangolin was involved in the transmission.
SARS-CoV-2 is known as a coronavirus because of its shape, which is circular with protruding club-shaped spike peplomars that look similar to the corona aura that surrounds the sun and other stars.
Coronaviruses cause respiratory tract infections, and while many coronaviruses in humans cause mild problems similar to a cold, rarer versions are more dangerous. Other examples of coronaviruses that have raised alarms in the past include SARS and MERS, both of which were deadlier than SARS-CoV-2, but not as widespread. Symptoms include fever, a dry cough, and shortness of breath.
Regardless of where SARS-CoV-2 came from, the virus has infected over 95,000 people and killed more than 3,000, primarily in China. It has spread to over 50 locations around the world, including the United States, and in the U.S. specifically, there have been cases of community transmission, where medical professionals are unsure of how the virus was contracted.
Many younger people who contract COVID-19 have recovered, but because this is a new virus, there are still many unknowns, and older people who are more prone to respiratory issues have not fared as well. There are also unknowns about the extent of the transmissibility of the virus, which has led to events worldwide being canceled as it spreads.
For those who want more information on the COVID-19 outbreak, the CDC's website is a good source, as is the World Health Organization.
Coronavirus Impact on Apple's Device Sales
When news of COVID-19 spread in late January and infection numbers began to rise, Apple shut down all retail stores, corporate offices, and contact centers in China for two or more weeks.
Many of the stores started reopening in late February, but there are still some store locations that remained closed into March, while other stores that reopened in February are operating on reduced hours. As of March 13, all stores are reopened, but are open for fewer hours than normal.
Closing stores, operating on reduced hours, government-imposed travel bans and quarantines, and the public's fear over contracting coronavirus in public spaces have led to less foot traffic in stores in China, which has significantly impacted Apple's sales in the country.
After closing stores in China, Apple elected to close all other retail stores in the United States and other countries on March 14. As of now, the stores remain closed and have not reopened, though Apple has said that it plans to begin reopening stores on a staggered basis in the first half of April.
Coronavirus Impact on Apple's Device Production
Many of Apple's suppliers in China were forced to shut down production for several weeks in early February, with the factory closures coming right after the Lunar New Year holiday. Main iPhone suppliers that include Foxconn and Pegatron were closed for quite some time because an outbreak of COVID-19 at a supplier campus where workers live in close quarters would be devastating.
Apple's factories were up and running by mid to late February for the most part, but travel restrictions from heavily impacted areas in China, mandatory quarantines, and low labor return rates led to delays with factories ramping up to full production. Outbreaks in new countries like South Korea have also led to factory closures.
Supplier issues have already led to some Apple products having long ship times, such as build-to-order versions of the iMac, iMac Pro, Mac Pro, and MacBook Pro, and this could be more of a problem in coming months as existing component supplies dwindle.
Analysts have lowered their estimated device shipments for the first half of 2020 due to the coronavirus, and the overall impact of the coronavirus throughout the rest of 2020 remains to be seen.
Rumors suggest that Apple plans to move forward with the launch of the rumored low-cost iPhone that's expected in March, but it's possible there could be some supply issues. Also at risk is the 2020 iPhone lineup, which Apple begins working on much earlier in the year.
Apple has implemented travel restrictions for its employees, and employees have not been able to travel to China to begin the preparation process that takes place ahead of when new iPhones are manufactured. In February, Apple employees typically travel to China to perfect their manufacturing processes with partners like Foxconn, and delays have the potential to eat into the time that Apple needs to finalize orders for chips and other iPhone components.
At this time, it's unclear if the COVID-19 outbreak is going to impact the launch of the iPhone 12. A recent report from Japanese site Nikkei says that Apple is considering pushing back the launch of its 2020 iPhones by several months, but a separate report from Bloomberg says that the iPhone 12 models are still on course for a fall launch.
Apple's Response to Coronavirus
Apple in January announced plans to donate to money to groups dedicated to fighting the COVID-19 outbreak in China, and later, Apple CEO Tim Cook said it would more than double the company's donation.
As mentioned before, Apple temporarily closed all corporate offices and retail stores in China in response to the virus. Corporate offices are now reopened, and stores are in the process of reopening. In the United States, Apple has asked all of its corporate employees to work from home where possible, and it is provided unlimited sick leave to any employee infected with the coronavirus. Apple has shut down all stores in the United States and China.
According to Apple CEO Tim Cook, Apple's chief concern is the health and safety of its employees, supply chain partners, customers, and communities in which it operates, with Apple prioritizing people over revenue.
Apple has worked with its suppliers to source more than 10 million N95 masks that have been distributed to healthcare workers in the United States, and millions more have been donated in Europe.
March Revenue Cuts
Apple in mid-February announced that its financial guidance for the March quarter would fall short due to the COVID-19 outbreak. During the January earnings call, Apple said it expected to see revenue of $63 to $67 billion in the March quarter, but that is no longer a goal the company will be able to meet.
Apple cited lower customer demand in China and constrained iPhone supplies worldwide as the factors leading to lower than expected revenue. We won't know the full extent of the coronavirus's impact on sales until Apple's next earnings call, expected to take place in April.
Apple's stock has been fluctuating wildly due to uncertainty caused by the spread of COVID-19. On February 16, Apple's stock hit an all-time high closing price of $327.20, but by February 28, it had dropped as low as the $260s. As of March 2, it was back up to $298 a share, but by March 13, it had fallen again to $259 a share, dropping further on March 25 to $245 a share.
Stock prices may continue to ping pong back and forth as analysts and shareholders attempt to determine the long-term impact of the coronavirus.
Coronavirus and WWDC
With COVID-19 now spreading across the world, many companies have been canceling or postponing major events that would see people gathering in large numbers Apple has elected to hold its WWDC 2020 event in a digital-only capacity for the first time with no physical gathering due to the ongoing spread of the coronavirus around the world. The online-only event will take place in June.
Apple says the online WWDC event will be "packed with content" for consumers, press, and developers alike. Millions of creative and innovative developers will be provided with early access with new software, and will be able to engage with Apple engineers.
Though there will not be a physical event in San Jose, Apple will hold an online keynote to unveil new software (and perhaps hardware) products. We're expecting Apple to unveil iOS 14, iPadOS 14, macOS 10.16, tvOS 14, and watchOS 7."We are delivering WWDC 2020 this June in an innovative way to millions of developers around the world, bringing the entire developer community together with a new experience," said Phil Schiller, Apple's senior vice president of Worldwide Marketing. "The current health situation has required that we create a new WWDC 2020 format that delivers a full program with an online keynote and sessions, offering a great learning experience for our entire developer community, all around the world. We will be sharing all of the details in the weeks ahead."
"With all of the new products and technologies we've been working on, WWDC 2020 is going to be big," said Craig Federighi, Apple's senior vice president of Software Engineering. "I look forward to our developers getting their hands on the new code and interacting in entirely new ways with the Apple engineers building the technologies and frameworks that will shape the future across all Apple platforms."
Apple will also make developer sessions and new information on the upcoming operating systems available through the Apple Developer website or the dedicated WWDC app for iPhone, iPad, and Apple TV, though it is unclear at this time if there will be a paid component.
Apple plans to provide additional information about the event between now and June through an email, in the Apple Developer app, and on the Apple Developer website.
With no event happening in San Jose, Apple has also pledged to donate $1 million to local San Jose organizations to offset the associated revenue loss as a result of WWDC 2020's online format.
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Article Link: COVID-19 Coronavirus: Impact on Apple's iPhone, Mac and WWDC