Microsoft continues to ready its upcoming flagship Xbox Series X, currently on the calendar for late 2020 availability, and marking a bold leap into the next generation of consoles. But the platform holder now finds itself navigating the fallout of the COVID-19 outbreak, better known as coronavirus, with an ongoing global impact filtering down all facets of the development pipeline.
Coronavirus cases have surged into the six figures worldwide, expanding beyond the epicenter in China, with rising cases now across the west. The influence on consumer electronics hasn't gone unnoticed, holding back staple conferences like GDC and MWC (oh, and likely add E3 2020 to the list), postponing product unveilings, and delaying the devices themselves. Global stock markets also reflect economic concern, recently posting the most significant falls in over a decade. It leaves a portion of the world on hold, as countries establish countermeasures to contain and delay the virus' spread.
We've seen the expected speculation in recent weeks, as the ongoing break raises countless questions for Microsoft's 2020 plans — many still without answers. That includes the next-generation consoles, falling just ahead of prime time for Microsoft and Sony, both finalizing hardware designs and readying production. What it means for the readiness of Xbox Series X and PlayStation 5 hinges on developments over the coming weeks, even if the volatility of an epidemic makes that hard to predict.
Coronavirus has already hit Microsoft and its supply chains
The early stages of the outbreak have changed everyday operations at Microsoft, as the wellbeing of Microsoft employees and its partners falls front and center. With Washington among the worst-hit U.S. states, Redmond has encouraged some employees to work from home over the forthcoming days. Similar measures were adopted in other affected regions, including South Korea and Italy. Several public conferences and showings have also been axed or postponed, with more likely to follow.
Xbox Series X could face shortages, typical for many consoles, but likely amplified in this climate.
Microsoft warns investors it expects to miss third-quarter guidance for its "More Personal Computing" segment, an upshot of supply chain issues at factories in China. It primarily attributes the shakeup to Surface and Windows OEM categories, referring to the production of its premium PC lineup and third-party hardware from partners. With widespread factory closures in China, Microsoft states the supply chain is recovering at a "slower pace than anticipated."
With reduced output from China, we're hearing Microsoft could be looking elsewhere to deliver Surface hardware moving forward. Nikkei reports Surface production may soon be offloaded to northern Vietnam, on track for midway through the year at the earliest. "The volume in Vietnam would be small at the beginning, but the output will pick up and this is the direction that Microsoft wants," a supply chain executive reportedly told Nikkei. While scaling operations in the region will take time, the shift could also help support the launch of the Xbox Series X on schedule.
Firms like Microsoft have looked to diversify in recent months amid U.S.-China trade conflict, with southern Asia only increasingly lucrative as coronavirus slows production. But equally, many materials and parts still come from China, with an unavoidable effect on the product roadmap to some degree.
We asked Microsoft if it can still commit to the Xbox Series X release during holiday 2020, however, declined to comment as of publication.
The latest on coronavirus continues to develop, as countries react to its spread, and changing the context around its impact on global industries. For Xbox Series X, the situation regularly evolves as new variables are introduced, making it hard to rule out possibilities this far from launch. If anything, AMD still referenced holiday 2020 availability for Xbox Series X and PlayStation 5, talking next-generation silicon at its Financial Analyst Day last week.
Microsoft has to do a lot right to deliver Xbox Series X in holiday 2020.
But with components and assembly demanding aid from countless partners, Microsoft could need to tackle growing challenges to deliver upon that end-of-year target. That's not considering the possibility of hardware shortages – typical for many consoles – but likely amplified in this climate.
In an ideal setting, Xbox Series X production will stick to the schedule, navigating the troubles posed by the coronavirus and its industry effect. However, it could mean significant changes behind the scenes for the traditionally China-made box, and a prospect to watch over the year ahead.