Delivery Delays Likely for Chromebooks, iPads Under COVID-19, Analyst Predicts
A potential bit of bad news for many school districts waiting on new mobile learning devices: the orders could be delayed even longer.
Tech giants such as Dell, HP, Apple, and Lenovo are likely to continue struggling to deliver laptops and tablets on time to K-12 schools in the immediate future, prolonging a frustrating stretch for district officials desperate to acquire devices such as Chromebooks and iPads for digital learning during coronavirus closures.
That's one key takeaway in a recent analyst note titled "The Impact of COVID-19 on the K-12 Education Mobile PC Market," from market research firm Futuresource Consulting. Michael Boreham, a senior consultant at the firm, writes that there's cause for concern about whether original equipment manufacturers (OEMs), a list that also includes Acer, Asus, and Samsung, will be able to fulfill orders set for delivery in the second quarter.
As highlighted in this Education Week story, the equivalent of a mobile device arms race has broken out among school districts across the country. It's the product of an instantaneous and unprecedented spike in demand from coronavirus school closures coupled with the simultaneous crippling of the Chinese supply chain.
District officials have been wondering when devices they ordered might arrive, or when they'll even be able to place orders for currently out-of-stock inventory.
Sprinkled with a bit of optimism about the supply chain but balanced with a dose of pandemic-based reality, Boreham's nearly 2,000-word analysis offers this conclusion:
"There is some suggestion that, at least in the short term, the device supply situation might be returning to normality. However, there is a widespread view that the quarter will be characterised by a softening in shipment activity, as the supply chain gradually returns to full strength while near to mid-term production issues still prevail. Although, China has relaxed its lockdown and is seeing industry ramp up, it is also seeing an increase in new virus infection rates. This may result in a reintroduction of social and working restrictions as 2020 progresses. Consequently, the quarter is likely to see the OEM's struggle to meet on-time deliveries. As a result, orders that have already been signed off may be pushed into late Q2 or even into Q3, as the OEM's try to catch up."
Some additional insights from the research note:
- From 'Swollen' to 'Depleted' Inventory:
Heading into 2020, device makers were not only bolstered by unsold stock from the year earlier but, according to Boreham, inventory levels "were swollen" due to a rush to pre-build in anticipation of trade tariffs threatened by President Trump against China. As a result, device makers were well positioned to mostly absorb the increased demand in the first quarter of 2020. They may not be able to keep pace in the coming months.
"Nonetheless, some OEM's and distributors are running with depleted inventories, raising concerns over Q2 and whether OEM's will be able to replenish stock levels to meet Q2 shipment commitments, both to existing projects and anticipated run-rate orders," Boreham writes.
- 'Weak Link' in the Supply Chain:
The speed at which manufacturing could return to full capacity remains "questionable," writes Boreham. There are issues concerning not just components required in mobile devices, but also the availability of raw materials used by the component suppliers.
"Feedback from OEMs highlighted concerns over shortages of batteries, displays and silicon for CPUs during 2020," Boreham writes. "Clearly, with so many components feeding into the assembly of mobile PC's, any weak link in the wider supply chain can ripple through the manufacture and assembly process, leading to delays in device shipments."
- 'Eye' On Future Inventory Levels:
The pressure is on for device manufacturers. Schools around the world, not just in the U.S, are working to implement and run remote learning programs. Boreham writes that the current K-12 mobile device crunch highlights an operational problem in the supply chain, namely the focus on "Just in Time" manufacturing. It's a production strategy that manufacturers use to increase efficiency and minimize inventory by having the supply chain deliver parts on an as-needed basis.
The method removes the cost of storing tons of stock and alleviates concerns of sitting on unsold inventory. It also requires producers to forecast demand accurately. Boreham notes that it leaves "proponents exposed when the supply chain is compromised."
Moving forward, he writes that "one eye" needs to be kept on mobile device inventory levels beyond the summer because of the negative impact that another wave of coronavirus outbreaks could have on supply going into next year.
"Although in the short-term, the focus is on minimising Q2 disruption and meeting near-term order commitments, one eye needs to be on next winter and minimising supply chain disruption in the event of any possible reprise of COVID-19. As a result, Q4 may see OEMs begin to stock build to meet Q1 and part of Q2 2021 demand."