A latest report claims that the PS5 and Xbox Collection X launch dates could possibly be delayed as a result of coronavirus outbreak. However we do not assume its very seemingly.
Monetary companies firm, Jefferies Group (by way of Enterprise Insider), revealed a notice this week which claims that, due to Sony and Microsoft manufacturing their consoles and equipment in China (which has been hit hardest by the virus), the upcoming PS5 and Xbox Collection X releases could also be delayed.
“The online game sector is at present manufacturing, or starting to, a once-in-several-years’ product technology change for the 2020 vacation season,” the notice reads. “If [company] shutdowns exceed a month or so, recreation schedules will likely be delayed. New consoles might likewise undergo provide points from a chronic disruption, forward of their Fall 2020 deliberate launches.”
Let’s not panic
We did not assume this appeared seemingly – particularly given the panic that is at present surrounding coronavirus. So we determined to ask video games trade analyst, and managing director of Fairness Analysis, Michael Pachter to weigh in on the report.
Whereas Pachter emphasizes that it is onerous to know the way lengthy the coronavirus outbreak will final, he additionally factors out that, whereas the mobile industry may be disrupted by the outbreak, console manufacturers are a different kettle of fish.
While the likes of Apple rely on Chinese manufacturing, Microsoft and Sony are not confined to the country.
“[Apple] doesn’t really have a realistic manufacturing alternative because of the complexity of assembly (many components, very high specs, relatively high cost),” Pachter tells TechRadar. “In contrast, Xbox and PlayStation don’t have to be produced in China, but obviously that is the lowest cost country.”
Pachter goes on to explain that Microsoft and Sony should be under less pressure as both companies have lower production demands, due to their release dates in late 2020, and (worst case scenario) have manufacturing alternatives in countries such as Taiwan and Vietnam. On the other hand, Apple is rumored to be releasing the iPhone 12 much sooner – in September – so any disruption could cause delays due to the tens of millions of units they’re likely to try to shift – and remember, they’re pretty much confined to China for that production.
Pachter estimates that both Microsoft and Sony won’t commence production on their next-gen consoles until at least June. However, when they do, they’ll only be looking at producing roughly one million units per month, compared to Apple’s estimated three to four million units a month.
“If Coronavirus lasts through June, it will be a problem for [Microsoft and Sony],” Pachter tells us. “It’s possible that it lasts that long, but the stock market tells you that is not the case. If it were, the market would be tanking because of the long-term disruption of the supply chain.”
“I could see Apple panicking if Coronavirus is still an issue in a month, but I think Sony and Microsoft will quietly arrange for production in Taiwan and Vietnam (at a cost of maybe $5 – 10 per unit more at most) just to be safe.”
In the worst case scenario, Pachter still speculates that Microsoft and Sony will have plans in place. And that’s because of Trump’s China tariff.
President Trump had proposed a 25 percent tax on items moving from China into the US, that would have hiked up prices of the Xbox Series X and PS5, however the Phase One agreement signed by the USA and China last month means that will not go forward – at least for now.
But as Pachter points out, it’s likely that both Microsoft and Sony have a back-up plan for production in case the tariffs do go ahead.
“I don’t know what they plan to do, but presume they are giving serious thought about shifting half their production to Taiwan or Vietnam to fulfill U.S. demand,” Pachter tells us.
While nothing’s set in stone, and we can’t definitively say it won’t happen, for now at least it seems unlikely that we’ll see the PlayStation 5 and Series X delayed.