Effects of Coronavirus still unknown, as tech giants soldier on

  • Cancelled telco extravaganza will hit the industry, affiliates badly
  • Huawei, Samsung launch flagships; supply chain, demand face challenges

Effects of Coronavirus still unknown, as tech giants soldier onLAST week, from Feb 24 to Feb 28, would have been the extravaganza of the latest and the greatest in all things telecommunication and mobile but alas, it did not happen.

Held yearly at the Fira de Barcelona, the Mobile World Congress (MWC) 2020 was poised to have been the biggest showcase led by tech behemoths that spans the world’s largest telco vendor Huawei Technologies Co Ltd to most profitable cloud player, Amazon Web Services, (AWS), and everyone in between. 

But the severe spread of the coronavirus outbreak put the brakes on the MWC 2020 edition. At first, the MWC organisers, the GSM Association put on a brave front and said that despite the spread of the virus in January, the show will go on. 

The GSMA pledged to carefully follow and adhere to the recommendations from the World Health Organisation (WHO), the Chinese government, and all Spanish health authorities. It confirmed on Jan 29 that registrations had not been affected up to that point.

Still defiant about not shuttering the show, the GSMA reiterated its stance that it will continue to keep the MWC 2020 opened with a litany of precautions in place. Then on Feb 10, AWS pulled out from MWC 2020, following other players such as South Korea’s LG Electronics, Swedish telco gear maker Ericsson and US chipmaker Nvidia Corp, Reuters reported.

Finally, the GSMA surrendered and called off the mega event on Feb 12, with its CEO John Hoffman, saying it had cancelled MWC 2020 because “of global concern regarding the coronavirus outbreak, travel concerns and other circumstances, making it impossible for the GSMA to hold the event.”

The impact of such a cancellation can’t be overstated. According to FastCompany, some 100,000 visitors were expected to descend on Barcelona, spending everything from accommodation to food and beverage. 

The total spending at the conference in 2019 was US$513 million (RM2.14 billion). Some 14,000 temporary workers were expected to be working during the week, which would have boosted the local economy and the ecosystem surrounding the hospitality industry.

"The cancellation of MWC Barcelona puts the mobile industry into uncharted waters," Frank Gillett, vice president and principal analyst for Forrester said. “There's no way to make up for all the social, in-person conversations that are oxygen for the competitive mobile industry.”

Meanwhile, Gartner research’s Meghan Rimol told Windows Central that “events [at MWC 2020] give tech companies the ability to engage with buyers firsthand and potentially accelerate opportunities.”

And the BBC reported that smaller telco ecosystem-based firms were badly affected by the cancellation, such as Connectlab which makes Internet connected devices. The firm had reportedly spent some €50,000 euros (US$55,700) on the conference.

Ben Wood of CCS Insight told the BBC that many smaller firms might be considering whether to attend next year because "they have had to swallow many of the costs from this year's show".

"The GSMA now needs to be careful that there is not a knock-on effect from this year's cancellation,” he said. “Major companies and many attendees will be reviewing the importance of MWC to their business and the GSMA must work hard to have a clear path forward.”

Launching anyway

Effects of Coronavirus still unknown, as tech giants soldier on

While the fallout of calling off the MWC 2020 isn’t exactly clear yet, tech giant Huawei soldiered on. On Feb 24, it launched a revamped version of its foldable phone, the Huawei Mate Xs. It unveiled its debut foldable smartphone, the Mate X, last year with much pomp at MWC 2019 on Feb 27.

It came off the back of rival Samsung Technologies Co Ltd, which launched its Galaxy Fold a week before that. The original Galaxy Fold was a flop because of a litany of issues, and so Samsung went back to the drawing board. Samsung finally introduced the Galaxy Fold to the world in September last year. 

READ MORE: Review: Galaxy Fold: Let the foldable games begin

The problems Samsung faced prompted Huawei to relook at its launch date for the Mate X. Eventually, it only released the Mate X late in 2019 in November, and only in China, its home market.

With similar design cues from the Mate X, the Huawei Mate Xs will be launched outside its home market. The company made an announcement noting that it is expected to arrive in Malaysia on Mac 20. 

Huawei claims to have addressed the core of problems foldable smartphones face, namely a more durable hinge to withstand frequent folding. It also upgraded its internals to include the newer generation Kirin 990 chip, which makes it 5G-ready.

The key difference however is that the Mate Xs will not have Google’s software ecosystem, commonly known as Google Mobile Services (GMS), which is the heartbeat of every Android smartphone outside of its Android operating system. But this, according to Counterpoint Research, is a problem.

The lack of GMS is far from excellent,” said Peter Richardson, research director at Counterpoint. “This means the product is likely more or less unsaleable outside of China.” 

Richardson also noted that the Mate X’s outward-folding screen means that the screen is vulnerable to damage unless placed inside a case. 

“We noted that one of the demo devices already had scratches on the surface of the display, despite Huawei adding additional layers to the screen,” he observed.

He added that the battleground of foldable phones may shift towards foldable clamshell designs, such as the ones introduced by Motorola in its latest Razr smartphone and Samsung’s Galaxy Z Flip.

“The original Mate X was, arguably, a far better design than Samsung’s Galaxy Fold. However the clamshell design of the Z Flip has a lot of positives – inherent screen protection and buyer familiarity. 

“That Huawei is still refining the outwardly folding, and vulnerable, Mate X design suggests that it sees a future in this form factor [but] we’re less certain.”

Effects of Coronavirus still unknown, as tech giants soldier on

Flip smartphones

Speaking about clamshell design flip smartphones, the reborn Motorola Razr was the first to market with this form factor. The new foldable Razr boasted of the ability to not show its crease lines where the fold of the screen is, thanks to a unique design, reports CNET

However, as innovative as that design was, there were reports on several different tech news portals – CNET, Ars Technica and BGR – claiming that the Razr’s hinges weren’t as durable as advertised.

Motorola particularly wasn’t happy with the way CNET conducted its test on the Razr and came back noting that the hinge stopped functioning after “27,000 folds.” It issued a response, claiming that the machine used to test the folding was simply not designed to test its device. 

“Any tests run utilising this machine will put undue stress on the hinge and not allow the phone to open and close as intended, making the test inaccurate. 

“The important thing to remember is that Razr underwent extensive cycle endurance testing during product development, and CNET’s test is not indicative of what consumers will experience when using Razr in the real-world.”

Meanwhile, Samsung’s latest flip foldable smartphone, the Galaxy Z Flip, has received some mixed initial impressions from a number of sources. The Verge’s Dieter Bohn noted that while the Z Flip had a number of plus points including a great performance and decent battery life, there are still issues with the display, including the screen being susceptible to scratches. 

Engadget’s Chris Velazco noted that there isn’t a hurry to get a flip smartphone yet because “embracing that future means putting up with a lot of compromises and that even though the Z Flip has fewer than most, the same lingering foldable criticisms apply.”

Effects of Coronavirus still unknown, as tech giants soldier on

Forecasts gloom

So the MWC 2020 didn’t happen with coronavirus slowing things down with most major brands hunkering down and bracing for the worst. Yet, that’s not stopping companies from marching forward as some brands are doing what they can to push their wares forward.

The more alarming trend is how this near-pandemic will hit tech companies in the longer run. Apple Inc and Microsoft Corp have already warned about missing their respective next quarter numbers. Other industries are also facing the brunt of this impact.

According to Gartner, the full impact of coronavirus on supply chains might not become obvious until sometime in the next few months and beyond. However, supply chain leaders should take initial steps now to monitor and prepare for the impact on their value chain.

Commenting on impact of the Coronavirus on the Chinese smartphone market, Brady Wang, associate director at Counterpoint Research, said, “Demand-wise, we see the market impacted severely. We estimate more than a 50% y-o-y decline in offline smartphone sales during the lock-down period.

CCS Insight, another analyst firm, noted the technology industry leans heavily on macroeconomic growth and the effect of the virus outbreak on the global economy is still unknown.

The two main short-term concerns are firstly, the demand in China and secondly, the global supply chain, said Marina Koytcheva, vice president of forecasting for CCS Insight. 

“The demand for technology products, particularly hardware, in China has fallen significantly. Sales in physical stores have been badly hurt, as many stores have been closed for a prolonged period of time, with some still closed. 

The second short-term business concern for the tech sector is the disruption to the global supply chain, argues Koytcheva.

“As it stands, we expect that supply constraints will lead to shortages of some technology products worldwide. 

“Some products will be more affected than others.. newer, more innovative products are likely to be more vulnerable, as they rely on some components that will be hard to source from alternative places, at least in the short term,” she argues.

It remains to be seen what will happen in the next two quarters but I believe it's safe to say that things are going to get worse before it gets any better.

 

 
 
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