Tech giant grapples with a ban on flagship Apple Watch models after losing a patent case to Masimo
In a significant turn of events, Apple has announced the cessation of sales for its cutting-edge smartwatches, the Series 9 and Ultra 2, in response to an ongoing patent dispute. The decision follows closely after a ruling by the International Trade Commission (ITC), favoring Masimo Corp., highlighting alleged infringements related to blood oxygen measurement technology.
Patent dispute fallout and implications for Apple watch
The cessation in sales is a strategic response to the looming ban imposed on specific Apple Watch models incorporating a blood oxygen sensor, a pivotal feature introduced in 2020, as asserted by Masimo. Based on the ITC's findings of patent infringement, this ban has prompted Apple to halt the sale of these devices via its online and physical retail channels starting from December 21.
The Apple Watch Ultra 2 and Series 9 constitute the cornerstone of Apple's watch sales, contributing significantly to its Wearables, Home, and Accessories division, which generates over $40 billion annually. With Ultra 2 and Series 9 accounting for the bulk of watch revenue, their withdrawal from the market during the crucial holiday season might noticeably impact the company's financial projections.
While awaiting the conclusion of a presidential review—expected on Christmas Day—Apple remains resolute in its intent to appeal the ITC's ruling. However, the departure of key Apple Watch executives and the intricacies of hardware patents suggest a prolonged dispute resolution process, potentially impacting future product redesigns.
Future outlook and sales projections
Despite the sales halt through Apple's official channels, the smartwatches will still be available via third-party retailers, possibly offsetting some revenue loss. Yet, the disruption may cause uncertainty on Apple's first-quarter revenue, previously anticipated to reflect the prior year's figures. This move might affect the company's streak of declining sales, currently spanning four consecutive quarters.
The unprecedented ban on a core product marks an unprecedented crisis for Apple, necessitating careful legal plans and potential changes in product design to comply with patent regulations. However, the company's ability to swiftly address this issue or devise alternative strategies remains uncertain, given the complexity of hardware-related patent disputes.
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