It has become almost a truism that most global pandemics cause more damage economically than they do to human health, and this could well end up being the case for the current Wuhan coronavirus outbreak. This has not yet become a full-blown pandemic, although it has been declared a global public health emergency by the WHO (World Health Organization) and its full toll both on human health and economies depends on how quickly the outbreak is brought under control. But in the short term, it has wrought havoc on global supply chains feeding major sectors including of course technology.
Serendipitously, Faultline had already decided against attending Mobile World Congress 2020, after being present on the ground for the previous three years in a row. Even over this relatively short period of time, our coverage described a more prominent consumer-focused flavor at each consecutive rendition of the event – representing MWC’s dwindling relevance in B2B media technology. The ‘CES of Europe’, as some have come to describe it.
Nevertheless, countless technology sectors have become highly tuned around Just-in-Time Delivery to cut costs and also heavily dependent on Chinese components, so the impact was almost immediate, and its severity again depends on duration.
Despite moves by the Trump administration to reduce dependence on Chinese components, this has had little impact yet on some of the country’s major tech players, especially Apple, half of whose iPhones are manufactured in the province of Henan, where there have been many cases of the infection. Apple had already started taking measures to reduce its overall concentration in China in the wake of the trade dispute with the US that intensified in 2019, before settling in a standoff after some minor concessions on each side. Such measures are likely to be accelerated now, especially as China is periodically the source of these “zoonotic” infections.
Apart from disrupting supply chains, obvious immediate casualties include conferences and exhibitions, with this year’s MWC in Barcelona from February 24th to 27th now officially canceled. Prior to confirmation, local news outlets had been reporting this week that MWC organizer GSMA was trying desperately to get the plug pulled by pressuring the Spanish government into declaring a national state of emergency.
Among big names to pull out as catalysts to MWC’s cancellation include tier 1 operators Vodafone, Deutsche Telekom and British Telecom, joining technology titans Facebook, Intel, Amazon, Nokia, Ericsson, Sony, Nvidia, CommScope and Amdocs, on a growing list of big-name withdrawals.
There is now certainly no chance of any good news from the WHO for MWC 2020, given that the outbreak is still expanding. So far, its impact has been miniscule compared with the seasonal influenza that afflicts both hemispheres during their winter and especially the more densely populated northern ones. But, being a new virus, the precautionary principle applies since it is unknown exactly how it will evolve.
The question of interest to the tech sector is at what point the emergency will be declared over so that normal business activity can be resumed. That will depend on measurements around several metrics, a key one being the incidence of new cases in the Wuhan area where the outbreak began. When that drops off WHO could decide that the emergency is over and that measures such as quarantining have worked. This may well happen as the northern hemisphere spring gets going because all these seasonal viruses transmit much less effectively in warm weather.