Canalys Widens Q4-Q1 Smartphone Shipment Falloff Forecast to 50% On Virus Worries

The revised forecast was given with the proviso the supply chain recovers to pre-outbreak levels by the end of the month, “giving the market a full month to recover in March,” Canalys said. “But the forecast scenario might deteriorate or improve rapidly as more information becomes available,” it warned in a Feb. 3 report released Monday.

The market research firm identified sales channels, consumer demand, 5G and product launches, and the impact of production on global channels as four factors determining the short-term outlook. It noted that Apple temporarily closed all retail stores in China. Stores were scheduled to reopen Sunday, but reports say closures were extended. Online sales are hampered by availability of delivery workers, it said.

Reports of manufacturing varied Monday. Reuters said that 10 percent of Apple smartphone maker Foxconn's workforce in Shenzhen had been greenlighted Monday to return to work after reporting Saturday that the Chinese government had blocked plans for workers to return.

Canalys said consumer consumption rebounded quickly after the 2003 SARS outbreak was contained but that the coronavirus has spread more widely within a shorter time, having a “likely impact on small and medium-sized businesses” that could in turn affect jobs and employment. “For products that are heavily driven by consumer upgrades, such as smartphones, growth will slow” for 2020, leading, Canalys predicted, to 10-15 percent shipment declines over 2019.

On 5G impact, vendors’ planned product launches could be canceled or delayed, said the report, “given that large public events are not allowed in China.” Tech vendors are likely to stall marketing activities, and “previously planned large overseas launch events will likely be suspended or reduced in size given the travel bans and restrictions imposed by various countries." It will take time for vendors to change product launch road maps in China, which could dampen 5G shipments this year, it said.

Withdrawals from MWC on coronavirus fears continued over the weekend and Monday. Sony joined the companies pulling out of the show, saying Monday it has been closely monitoring the "evolving situation following the novel coronavirus outbreak,” that's been designated as a global emergency by the World Health Organization. Considering the “safety and wellbeing of customers, partners, media and employees,” Sony decided to withdraw from participating in MWC and will instead hold a press conference at its scheduled time -- 8:30 a.m. CET Feb. 24 -- via its Xperia YouTube channel.

NTT Docomo and Amdocs, too, said Monday they won’t attend MWC this year. “While we appreciate the precautionary measures put into place by the GSMA, we believe the safest option is not to attend MWC 2020 in Barcelona," said Shuky Sheffer, Amdocs CEO. The New York Times referenced Reuters Sunday in posting an Amazon statement saying the tech giant was withdrawing from exhibiting and participating in MWC. The company’s AWS unit had planned to host a full-day conference track on day one.

Nvidia, citing health concerns, pulled out of MWC Friday, saying it had been looking forward to sharing its work in artificial intelligence, 5G and vRAN with the industry: “We regret not attending, but believe this is the right decision.” LG and Ericsson also canceled plans last week to exhibit at MWC (see 2002070049).

MWC organizer GSMA has been posting frequent updates on the coronavirus and its impact on the show. The London-based organization said Saturday it regretted Ericsson’s decision not to attend and that its cancellation “will have some impact on our presence at this time and will potentially have further impact.”

In its most recent update Sunday GSMA acknowledged the disruption caused by the virus, saying the health and safety of exhibitors, attendees and staff “are of paramount importance.”

While the GSMA confirmed “some large exhibitors have decided not to come to the show this year with others still contemplating next steps, we remain more than 2,800 exhibitors strong.” It said it’s “grateful for the preventative measures our Chinese exhibitors have put in place, notably ZTE and Huawei.” Among the measures: Travelers who have been in China have to demonstrate proof they have been outside of China 14 days prior to MWC; it doubled onsite medical support vs. 2019; increased cleaning and disinfection of public surfaces, handrails and restrooms; implemented a mic disinfecting and change protocol for all speakers; a suggested “no-handshake policy,” a 24-hour phone line for security and medical service will be running Feb. 13-29.