Bank of America expects Apple to delay the release of its 5G-enabled phone due to COVID-19. As a result, Canadian early tech adopters who are “brand agnostic” might switch to Samsung’s newly-launched 5G phone, an analyst says.
On March 6, the bank said it expects Apple’s highly anticipated smartphone will have “a month of delay” due to “both supply issues as well as the weaker demand environment from COVID-19.”
Edward Jones’ analyst Logan Purk said in an interview that the delay would be a big deal for those early adopters who were “anxious to upgrade their current mobile device this year.”
“Specifically for an Apple product, because you’re clearly holding out for this year’s model on the hope that it’s the new 5G model, it’s the best and fastest, but now that could be off the table... instead of the normal September it could be later in December, even early next year,” Purk said.
For customers who are “brand agnostic,” or are mostly indifferent about which company makes a better product, Purk said that they could switch over to the recently announced Samsung S20 that has 5G capabilities.
“It’s in the market as a viable alternative in terms of a 5G handset from the premium market,” he said.
Samsung announced its Galaxy S20 5G-enabled smartphone series in early February. The phones became available in Canada on Friday, starting at CAD $1,319.99.
As of January 2020, Apple is Canada’s most popular handset maker with a 51.3 per cent market share, while Samsung is second at 28.7 per cent, according to StatCounter.
At pre-market, the tech giant’s shares fell 3.8 per cent, but Purk said this wasn’t a cause for concern. By midday, Apple’s shares were down about 2.5 per cent, trading around US $285.
“I don’t think the shares are fully reflecting the potential negative impact from a delayed rollout or supply disruptions at this point,” Purk said in an early afternoon phone interview.
Gene Munster, an analyst at Loup Ventures, also wasn’t surprised by a projected delay in releasing the 5G-enabled smartphone.
“This is going to have a more lasting impact than I think we realize, even the things that are quickly course-corrected, it’s still going to have an impact for 2020,” he said.
“It is safe to say that 2020 has become a transition year and all bets are off in terms of what to expect this year.”
Munster said Apple will work to maintain its credibility amid the delay by highlighting its other products.
“They’re going to benefit from 5G... they’ve got wearables, services and augmented reality,” he said. “Yes 2020 is a transition year, all bets are off, but if you take a step back... the secular tailwind that was in place before all this happened will be in place after it’s been resolved and Apple is going to benefit from that.”
With files from Bloomberg