Apple: 5G-shock 

Hyped up for years, 5G wireless technology was supposed to give sluggish smartphone sales a shot in the arm this year. The global pandemic has put paid to that. Unless lockdowns end and supply chains fire back up soon, new launches will have to go on hold until 2021.

This may be a problem for Apple. A worldwide drop in phone sales last year spurred the US gadgets giant to raise prices, lifting revenues at the same time. Demand for a new 5G model due this autumn was expected to drive up sales by volume too. 

Without a rollout of 5G phones, consumers may continue to avoid upgrading their handsets. In 2019, smartphone sales fell 2 per cent by volume, according to data from technology research firm Gartner. It expected a resurgence this year, largely because of new 5G models. Gartner predicted sales would rise 3 per cent on the previous year in 2020 to 1.57bn. If sales fall back 2 per cent instead, shipments will dip to 1.49bn.

There is little Apple can do. The company has been praised for its rapid and responsible response to the pandemic. It closed stores quickly and while launching the new iPad Pro and Macs. Further launches will be more difficult. Even if the crisis abates by the autumn, mass production would need to begin in a month for a new model to be ready in time.

The company cannot make up lost sales in other arms of its business either. Services are in high demand as bored customers sit at home. They hit a sales record in the three months to the end of December and should reach a fresh record in the next quarter. But at $13bn, they are just a quarter of iPhone sales. 

IPhone sales will not seize up entirely, even without a new 5G phone. About a third of iPhones are due an upgrade, according to analysts at Wedbush. Perhaps some consumers will opt for last year’s model instead. It may not boast novel bells and whistles, but iPhone revenue growth in the last quarter was the best in a year, proving the iPhone 11’s popularity. Not every customer is waiting for a 5G phone.

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