Title: Apple Faces Sales Halt on Latest Smartwatches Amid Patent Dispute with Masimo Corp.
In a new blow to Apple, the company will be forced to stop selling its flagship smartwatches in the United States due to an ongoing patent dispute with Masimo Corp. The sales halt, set to commence on December 21, will impact the highly sought-after Apple Watch Series 9 and Ultra 2 models, just in time for the busy holiday season.
The dispute revolves around a crucial feature: the blood oxygen sensor, a selling point in Apple’s health-focused devices. Masimo Corp. claims to have invented this technology and asserts that Apple is infringing upon its patents. In October, the International Trade Commission (ITC) ruled in favor of Masimo, ordering Apple to cease sales of the infringing devices.
This directive, currently under a presidential review, marks the first time Apple has been compelled to stop selling a core product due to a patent issue during its most crucial quarter. The impact on Apple’s revenue is a significant concern as the Series 9 and Ultra 2 models generate the majority of the company’s watch sales, estimated to have earned approximately $17 billion in fiscal 2023.
The sales halt affects not only the latest models but also older versions that feature the blood oxygen sensor. However, customers who have already purchased the watches will remain unaffected by the dispute. To minimize disruption, Apple plans to continue selling through third-party retailers.
The news of the sales halt has prompted a decline in Apple’s shares while Masimo Corp.’s shares have gained ground. The latter contends that the ITC ruling confirms Apple’s violation of its patented pulse oximetry technology, emphasizing that even powerful companies such as Apple must comply with the law.
Furthermore, the departure of two key executives overseeing Apple Watch development, although unrelated to the patent dispute, has added to the company’s challenges. As the ruling now rests with US Trade Representative Katherine Tai, Apple intends to appeal the decision.
The resolution of the dispute is uncertain, as it involves hardware patents, and a mere software update might not suffice. Consequently, the impact on Apple’s first-quarter revenue remains to be seen. However, the continued availability of the watches through third-party retailers may provide some relief and could potentially boost sales in the coming months.
Despite this setback, Apple remains a dominant player in the tech industry. While it has faced patent disputes before, most were limited to older iPhone models and specific regions. Notably, this particular case differs in that Masimo Corp. is an American company, potentially adding a unique dynamic to the proceedings. As Apple navigates the challenges, it appears that resolving the dispute swiftly and efficiently will be critical to maintaining its position as a leader in the smartwatch market.
In anticipation of the sales halt, Apple has already adapted its marketing strategy, promoting the watches without displaying specific images of the Series 9 and Ultra 2 models in its retail outlets. Now, all eyes are on the US Trade Representative’s review, which may decide the fate of Apple’s smartwatch sales in the coming weeks.
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