Dec 19, 2023 - Technology

What's next in the Apple Watch sales pause saga

An Apple Watch Ultra 2 on display in an Apple store in Los Angeles.

An Apple Watch Ultra 2 on display in an Apple store in Los Angeles. Photo: Patrick T. Fallon/AFP via Getty Images

Apple is preparing to pause U.S. sales of its Apple Watch 9 and Ultra 2 as required by a U.S. International Trade Commission ruling in an intellectual property lawsuit from earlier this year.

Why it matters: Apple, through the Apple Watch, is the largest smart-watch seller in the world, with its devices accounting for nearly a third of all purchases across the globe last year, according to tech research firm Counterpoint Research.

How we got here

The ITC ruled in October that the blood oxygen sensors found in Apple's watches infringed upon patents held by medical device company Masimo, which also produces fitness-tracking smart watches.

  • Apple then had two months to either work out a licensing agreement with Masimo or appeal the order to the Biden administration, which could reverse it, according to the New York Times.
  • Apple has said it strongly disagrees with the order. It did not negotiate with Masimo, though it did appeal to the Biden administration, per the Times.
  • The sales pause is expected to start at 3pm ET on Dec. 21.

Which watches are affected

The sales pause will affect all Apple Watch models with blood oxygen monitoring capabilities, introduced with the Apple Watch Series 6.

  • The ruling also only affects watch sales in the U.S., so the watches will still be available for purchase outside of the country.
  • Customers who have already bought one of the newer watches will not have any issues with the devices.

How the pause could impact Apple's finances

Occurring amid the holiday season, the pause just three days before Christmas could affect Apple's sales.

  • On the other hand, the pause could set off a run on Apple Watch sales, driven in part by people intending to resell the devices at a markup. This has happened several times in the past with other devices when supplies were limited.
  • But that likely won't be enough to change the fact that Apple is facing a fifth consecutive quarter of shrinking revenue. It announced in November that it does not expect to achieve revenue growth this holiday season.

What's next for Apple

The Biden administration has until Dec. 25 — the end of a 60-day Presidential Review Period — to decide whether to reverse the decision.

  • In the past, the Biden administration has criticized Apple for the way it runs its app store.
  • The administration also did not overturn a separate ITC ruling that blocked imports of Apple Watches for infringing AliveCor Inc. patents related to heart monitoring, according to Reuters. That patent case is currently suspended.
  • To avoid infringing on Masimo's patents, engineers at Apple are also rushing to change the software the device uses to measure and present a user's blood oxygen level, Bloomberg reports.
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