Apple plans rescue for $22.6b Apple Watch business just days away from US ban
LOS ANGELES – Apple is just days away from a US ban of its best smartwatches, and is plotting a rescue mission for the US$17 billion (S$22.6 billion) business that includes software fixes and other potential workarounds.
Engineers at the company are racing to make changes to a sensor on the Apple Watch that measures a user’s blood oxygen level – a feature that medical device maker Masimo has argued infringes its patents. They are adjusting how the technology determines oxygen saturation and presents the data to customers, according to people familiar with the work.
It is a high-stakes engineering effort unlike any Apple has undertaken before. Though the iPhone-maker’s products have previously been barred in certain countries over legal disputes, this restriction would hit one of Apple’s biggest moneymakers in its home country – on Christmas no less.
Without a last-minute veto by the White House, a ban imposed by the International Trade Commission (ITC) will take effect on Dec 25.
Apple could settle with Masimo, though that is a route it typically prefers not to take. And the two companies do not appear to have engaged on that front. For now, Apple is focused on modifying its technology and trying to win favour with regulators.
If the ban holds, Apple is working on a range of legal and technical options. Already, it has begun preparing stores for the change. It sent new signs to its retail outlets that promote the Apple Watch without showing photos of the Series 9 and Ultra 2 – the two models targeted by the ban. The company’s lower-end SE watch will still be available.
Apple plans to stop selling the prohibited watches on its website on Dec 21 and then pull them from its roughly 270 bricks-and-mortar outlets in the United States by Dec 24.
Outside the US, both models will still be available to purchase.
The ITC ban also applies only to Apple’s direct sales channels, so third-party retailers like Walmart, Best Buy and Target can continue offering the device. Walmart and Best Buy both said on Dec 18 that they do not plan to stop.
Work within Apple suggests that the company believes software changes – rather than a more complicated hardware overhaul – will be enough to bring the device back to store shelves. But the patents at the heart of the dispute are mostly related to hardware, including how light is emitted into the skin to measure the amount of oxygen in a person’s blood.
An Apple spokeswoman said the company is working on submitting a workaround to the US customs agency, which is in charge of approving changes to get a product back on the market.
Masimo has said that a software fix will be an insufficient remedy. “The hardware needs to change,” it added.