Everything the channel needs to know about the coronavirus outbreak
As the highly contagious illness hits continental Europe and approaches epidemic status, CRN lists off the effects it has had on the tech industry so far and what the channel should embrace for in the coming months
The coronavirus has caused massive upheaval in China, causing the deaths of thousands of its citizens and disrupting the global flow of supplies from one of the world's manufacturing powerhouses.
The past week has seen a proliferation of reports of the virus in a number of European countries, with Italy so far being the worst hit with 300 reported cases and 12 deaths.
As of 26 February, Greece, Austria, Croatia and Switzerland mainland Spain have all reported their first cases of the highly infectious illness, while the UK has reported 13 cases of the virus and France has had two deaths from the infection.
Excluding Italy, South Korea and Iran have reported the highest number of cases outside of China, which has so far reported 80,000 cases of the virus and 2,715 casualties as a result of the outbreak.
The IT industry has seen massive disruption to its supply chain, particularly for those companies that have large manufacturing operations in China, as well as massive events such as the Mobile World Congress (MWC) being cancelled to prevent the further spread of the illness.
The coronavirus yesterday wiped a collective $238bn from the stocks of tech titans such as Apple, Amazon, Google, Facebook and Microsoft after it emerged that the outbreak had spread outside of Asia.
We outline how the IT sector has been impacted by the outbreak, as well as where it can anticipate further disruption.
Event planning
The MWC is not the only industry event to fall foul of the coronavirus outbreak, but thus far it is the biggest to be cancelled.
Organiser GSMA had to pull the plug on the Barcelona event after a number of high-profile vendors pulled out, such as Cisco, Amazon, Intel, Nvidia, Vivo, LG, Nokia, Facebook and Sony citing their desire to prevent the spread of the virus.
Two days later, Intel followed suit and cancelled its partner event in Milan, due to the number of people unable to attend due to travel restrictions in place to contain the spread of the virus.
Facebook last week cancelled a 500-attendee global marketing event due to be held mid-March in San Francisco "out of abundance of caution" to avoid the spread of COVID-19, while Cisco cancelled its Cisco Live conference to be held at the start of March in Melbourne over similar fears.
Foritnet also abandoned its Accelerate partner conference in Barcelona, which was due to take place this week.
A number of trade shows around Asia have been pulled over fears of furthering the outbreak. The global trade event industry is valued at roughly $2.5trn and any hammering it takes will have a direct impact on airlines, hotels and the food and beverage industry, as well as the local economy of host cities.
However, not all massive conferences have been pulled out amid the pandemic panic.
The annual RSA security conference has gone ahead as scheduled this week, though IBM was one of a number of vendors to pull out citing coronavirus as the excuse. Major upcoming partner events such as HP's Reinvent in March, Dell Technologies World in May and Microsoft Inspire in July ae currently scheduled to take place as normal.
However, if the outbreak continues to gain ground across Europe and spread to North America it is likely other vendors may follow Intel and Fortinet's lead and postpone or cancel their events.
Vexed vendors
The eventual financial fallout for the channel is obviously yet to be calculated, but vendors have taken quarterly earnings calls as a means to establish their stances with regards to economic impact.
Apple CEO Tim Cook was one of the first to flag the impact the outbreak will have on the vendor's bottom line, telling investors it would fail to meet its quarterly target of between $63bn to $67bn due to a slower-than-anticipated recovery and iPhone supply shortages.
Cisco boss Chuck Robbins last week was dismissive of COVID-19, telling stakeholders that the issue is "not deep" and that the market uncertainty has "now dissipated" and he expects customers to pick up again.
Chinese vendors have been more optimistic in their predictions, with Lenovo CEO Yang Yuanging stating that its factories in China are back up and running, though there are limitations in relation to transport and travel.
"Given the situation remains extremely dynamic, it is difficult to provide an accurate estimation of the full financial impact," he said.
Daniel Zheng, CEO of Chinese e-commerce titan Alibaba, said that the company was being "tested" with the current crisis but predicted a repeat of the growth it experienced in the wake of the deadly SARS outbreak nearly 20 years ago.
"True to our mission, we will stand together with all of our merchants to overcome the current challenges and facilitate our users and our communities to fight against the virus. 17 years ago, the e-commerce business experienced tremendous growth after SARS," he declared.
"We believe that adversity will be followed by a change in behaviour among consumers and enterprises and bring ensuing opportunities."
PC market ‘impacted but not rocked' by virus
Analyst firm IDC forecast that the EMEA PC market would suffer slightly in 2020, but that it will be "impacted but not rocked" by the coronavirus.
There are myriad reasons for the predicted growth decline in the PC market, of which the coronavirus is just one, according to the analyst house. This decline will be felt almost exclusively in the consumer segment, while its commercial counterpart will be relatively buoyant.
The continued CPU shortage from Intel, the "ongoing stagnation" in the consumer segment alongside negative supply chain ramifications will result in a one per cent year-on-year decline in 2020.
However, commercial demand in the market will be fuelled by Windows 10 migration and stronger-than-expected demand for smaller form factors, driving overall commercial growth for the first three quarters of this year.
The turbulence caused by the coronavirus in some regions will negatively impact consumer demand throughout 2020. Despite this, the CEE and MEA regions have only slightly revised the overall PC market forecast for the first half of 2020 compared with the previous forecast.
"Intel CPU shortages, as well as supply chain concerns stemming from the coronavirus outbreak, will impact the Western European PC market in H120," said Helena Ferreira, research analyst, IDC Western European personal computing devices.
"Notebooks will be particularly vulnerable to the supply constraints due to the high concentration of manufacturing that occurs in the affected areas of mainland China."