During a recent virtual companywide meeting, Apple CEO Tim Cook discussed the coronavirus pandemic’s effect on the company, including its retail operations. The executive noted the firm would begin reopening its U.S. based stores in early May, which is right after it launches the second-generation iPhone SE. However, a recent Goldman Sachs note and a new Reuters report suggest demand for the firm’s smartphones is not strong.
Apple’s U.S. Retail Location Relaunch
Last month, Apple shuttered all 458 retail locations it maintains outside of mainland China in response to the coronavirus pandemic. On Thursday, Cook admitted he did not know when the firm’s corporate employees would be able to return to the office. However, he said his company wants to relaunch its international physical retail operations, starting with its Seoul, South Korea store, then expanding to the United States in early May.
Bloomberg notes Apple has already begun online reopening training sessions with its retail staffers.
Cook also said that while the Big Tech firm is not “immune to worldwide economic trends,” it is in a strong position financially. When asked about possible headcount reductions, the executive noted Apple has a robust balance sheet and has continued paying its retail staffers despite the store closures.
He also pointed out COVID-19 did not interrupt the electronics maker’s introduction of the iPhone SE or the new iPad Pro and MacBook Air. However, the conglomerate’s rosy financial picture may change if its 2020 handset releases are not well received.
iPhone Demand in Doubt
On Friday, Bloomberg published a report stating investment group Goldman Sachs recently downgraded its Apple rating from neutral to sell. In a note, the firm explained it predicts Apple’s iPhone sales will drop 36 percent annually in the current quarter due to COVID-19 prompted economic conditions.
Goldman Sachs also states the corporation’s device sales will rally in the fourth quarter for a 2 percent year-over-year decline. Bloomberg reported three other analysts estimate iPhone sales will fall by 28 percent in Q2 2020. A new report from Reuters offers a possible explanation for Apple’s soft near-term handset sales.
The newsgathering service states a recent poll conducted on Chinese social network Weibo found Sino buyers are not interested in the iPhone SE. Out of around 350,000 survey respondents, 60 percent or 210,000 people said they would not purchase the budget smartphone. One Weibo user received 10,000 likes for posting they would buy the device if its price went down by 200 yuan ($28.28).
Reuters also noted mid-range 5G-enabled devices are plentiful in China while the iPhone SE lacks fifth-generation mobile data network connectivity. That said, Sino iPhone sales surged by 19 percent after the region’s Apple stores reopened.
In 2019, the Cupertino, California-based corporation dominated the smartphone sales charts in North America and Europe throughout the year. But with COVID-19 less contained in those areas than China, Western consumers may hold off on buying the iPhone SE, especially with Apple’s first 5G handset reportedly coming out this fall.