Apple will stop selling the latest versions of its smartwatch in the U.S. due to a patent case, taking some of its best-selling devices off the market during the busy holiday season. Sales of the Apple Watch Series 9 and Apple Ultra 2 will be halted on the company’s online store on December 21 and at its physical retail locations beginning on Christmas Eve, it said in a statement Monday.
Apple patent case
The company is preparing for a looming ban of Apple smartwatches with a blood oxygen sensor a feature first added to the lineup in 2020 that Masimo Corp. says it invented, due to Apple patent case.
The International Trade Commission ruled in October that Apple violates Masimo patents and would need to halt Apple watch sales. The patents relate to how the watches calculate a person’s blood oxygen saturation.
A presidential review of that order is now underway. “While the review period will not end until December 25, Apple is preemptively taking steps to comply should the ruling stand,” the company said.
Apple watch ban
Health features have become increasingly critical selling points for the Apple smartwatches, putting the company in competition with medical device makers. Masimo, based in Irvine, California, sells a range of health monitoring technology.
In a statement, Masimo said the Apple watch ban “demonstrates that even the world’s most powerful company must abide by the law.”
The Apple Series 9 and Ultra 2 models generate the vast majority of Apple smartwatches sale. The company doesn’t say how much revenue the product line brings in, but it’s a core part of its Wearables, Home and Accessories business, which generates more than $40 billion a year.
According to analyst estimates, the Apple Watch alone made about $17 billion in fiscal 2023, which ended in September.
Older Apple smartwatches impacted
Apple patent case and sales halt will also impact some older Apple Watch models, including the Series 8, which Apple continues to sell in refurbished condition on its website. The blood oxygen feature was first added in the Apple Watch Series 6.
Stock update
The news of Apple patent case sent its shares down as much as 1.6% in New York on Monday. The stock had reached a record high last week. Masimo gained as much as 5.7%.
Apple on ban
The devices will be removed from Apple’s online store at 3 p.m. New York time on Thursday. Apple said there will be no impact to watches already sold to customers. The SE model, which lacks the blood oxygen feature, also remains on sale.
The company said it would provide more information on December 25 as the review period concludes.
An Apple spokesperson said that the ruling from the ITC is erroneous and should be reversed. The company plans to appeal the decision.
Other rulings for ban
Apple being forced to stop selling a core product in the U.S. is unprecedented, especially during the company’s most important quarter. In the past, Apple has had to halt sales of older iPhones in places like Germany due to patent issues.
In the U.S., the ITC has ruled before on other Apple disputes, including one with Samsung Electronics Co. over the iPhone and iPad.
If Apple doesn’t win on appeal or by presidential intervention, it’s unclear how long it would take the company to redesign the devices to not violate the Masimo patents.
The watches will continue to be sold via many third-party retailers, which could help buoy Apple’s fiscal first-quarter sales. In some cases, Apple products generate higher sales volume at outside retailers than through its own channels.
Apple’s revenue drop
The Cupertino, California-based company operates about 270 stores in the US. Apple previously said its first-quarter revenue would be in line with the year-earlier period. That suggests that the Apple Watch disruption could be the difference between revenue growing for the first time in a year or declining again. Already, the company’s sales have dropped for four straight quarters — the longest such streak in two decades.
Apple has been preparing its retail outlets for the disruption in recent days, sending stores new signs that advertise its watches without showing specific photos of the Series 9 and Ultra 2.
