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In an unexpected move during the final days of holiday shopping, Apple Inc. has announced a forthcoming halt to its sales of the latest Apple Watch models in the United States. The decision is a direct response to a recent ruling over a patent dispute with Masimo Corp., a company that specializes in medical monitoring technology.
Apple Series 9 and Apple Watch Ultra 2 (Apple) (Kurt "CyberGuy" Knutsson)
Apple confirms Apple Watch Series 9 and Ultra 2 will be removed
Apple, in its statement, confirmed that the Apple Watch Series 9 and Ultra 2 will be removed from the Apple online store starting December 21 and from physical retail stores on Christmas Eve.
This action is preemptive, aligning with a potential import ban on the models equipped with a blood oxygen sensor — a feature that became part of the Apple Watch Series in 2020. The International Trade Commission (ITC) ruled in October that Apple's incorporation of this feature infringes on Masimo's patents, specifically concerning an app that measures blood oxygen saturation.
The ruling is currently under a presidential review, which is expected to conclude by December 25. Apple has indicated that it aims to comply with the ruling if it stands, showcasing a proactive stance on the legal decision. However, an Apple spokesperson has labeled the ITC's decision as flawed, indicating that the company intends to appeal.
An Apple spokesperson provided a statement related to this unusual disruption in Apple Watch sales:
"A Presidential Review Period is in progress regarding an order from the U.S. International Trade Commission on a technical intellectual property dispute pertaining to Apple Watch devices containing the Blood Oxygen feature. While the review period will not end until December 25, Apple is preemptively taking steps to comply should the ruling stand. This includes pausing sales of Apple Watch Series 9 and Apple Watch Ultra 2 from Apple.com starting December 21, and from Apple retail locations after December 24.
Apple’s teams work tirelessly to create products and services that empower users with industry-leading health, wellness, and safety features. Apple strongly disagrees with the order and is pursuing a range of legal and technical options to ensure that Apple Watch is available to customers.
Should the order stand, Apple will continue to take all measures to return Apple Watch Series 9 and Apple Watch Ultra 2 to customers in the U.S. as soon as possible."
We've reached out to the White House to understand if President Biden intends on backing Apple or allowing the ruling in favor of Masimo stand and have not heard back at the time of this story being published. Former Vice President Al Gore is a longtime Apple board member. There is no word whether he or other Apple representatives understand what the President intends to do in this unusual legal challenge.
Apple Watch Series 9 (Apple) (Kurt "CyberGuy" Knutsson)
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A significant setback for Apple's bottom line
This situation presents a significant challenge for Apple. The tech giant's health-centric features on the Apple Watch have been major selling points, particularly as they venture into the territory traditionally occupied by medical device manufacturers. With the Series 9 and Ultra 2 being major contributors to Apple's annual revenue within its Wearables, Home, and Accessories segment — amounting to over $40 billion — the impact could be substantial.
The announcement saw a slight downturn in Apple shares by 1.3%, contrasting with the record high achieved just last week. Conversely, Masimo's shares experienced a boost, rising by 3.5%.
Apple Watch Ultra 2 (Apple) (Kurt "CyberGuy" Knutsson)
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How the halt in Apple Watch sales will affect customers
For customers, there is a silver lining: the SE model, which does not include the blood oxygen sensor, will continue to be sold, and current owners of the Series 9 and Ultra 2 will not be affected by this sales halt. Their devices will continue to function as normal, and no existing devices will be recalled.
Unprecedented blow to Apple's holiday sales
The necessity for Apple to cease selling a cornerstone product during its most crucial sales quarter is unprecedented. While Apple has faced patent disputes in other countries, leading to the cessation of sales for older iPhone models, such a significant action within the U.S. market, especially during the holiday season, is remarkable. It is a reminder of the complex interplay between innovation, competition, and intellectual property law in the tech industry.
Third-party retailers may still offer the affected models for a time, which could help sustain Apple's sales figures for the fiscal first quarter. Historically, some Apple products have seen higher sales through external retailers compared to Apple's own sales channels.
As Apple prepares for this change, retail stores have been updated with new signage, omitting specific images of the affected models. This strategic marketing move may mitigate customer confusion and manage expectations as the legal proceedings continue.
For those looking to purchase the Apple Watch Series 9 or the Apple Watch Ultra 2, time is of the essence. The window of opportunity is closing, and with the potential for an 11th-hour intervention by the Biden administration still in play, the future availability of these models hangs in the balance.
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Kurt's key takeaways
The unfolding scenario illustrates the delicate balance Apple must maintain as it navigates the legal landscape, consumer expectations, and its innovative pursuits. The resolution of this dispute will likely set precedents for future technology patent cases and could influence how tech companies approach the development of health-related features in their devices.
Do you agree with Apple’s decision to halt the sales of the Series 9 and Ultra 2 models in the U.S.? Why or why not? Let us know by writing us at Cyberguy.com/Contact.
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