Apple is set to cease sales of its latest smartwatch models, the Apple Watch Series 9 and Ultra 2, in the United States due to an ongoing patent dispute. This move, which comes just ahead of the busy holiday season, follows an October ruling by the International Trade Commission (ITC) that Apple infringed on Masimo Corp.’s patents related to the blood oxygen sensor technology present in these watch models.
Masimo, a California-based health monitoring technology company, claims that Apple unlawfully used its patented pulse oximetry technology for measuring blood oxygen saturation. The ITC ordered Apple to stop selling the infringing devices, prompting the company to halt sales on its online store starting December 21 and at physical retail locations from Christmas Eve.
The Apple Watch Series 9 and Ultra 2, along with some older models, constitute a significant portion of Apple’s watch sales, contributing to its Wearables, Home, and Accessories business, which generates over $40 billion annually. The potential ban affects Apple’s revenue, as the Apple Watch alone was estimated to have made around $17 billion in fiscal 2023.
Apple has already seen a dip in its stock prices in response to this news, while Masimo’s shares rose. The sales halt will also impact the Series 8, which Apple continues to sell in refurbished condition. Apple asserts that there will be no impact on watches already sold, and the less feature-rich SE model will remain available for purchase.
The ITC ruling is currently under a presidential review, with a decision expected by Christmas Day. Apple plans to appeal the decision, asserting that the ITC’s ruling is erroneous. This situation is unprecedented for Apple, and if the ban stands, it remains uncertain how long it would take for the company to redesign the devices to comply with Masimo’s patents.
Despite the disruption to its direct sales, Apple’s watches will still be available through third-party retailers, potentially mitigating the impact on the company’s first-quarter sales. The outcome of this dispute could significantly influence Apple’s financial performance, particularly as it seeks to rebound from four consecutive quarters of declining sales.
