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Apple to Halt Sales of Apple Watch Models Amid US Import Ban

2023.12.19

 

Key Takeaways

  • Apple Watch Series 9 and Ultra 2 sales to cease in the U.S. from Dec. 21 due to a patent infringement ruling.
  • The ban may affect Apple’s holiday sales, amidst broader business challenges globally.

Import Ban Triggers Sales Halt

Apple is set to temporarily discontinue sales of certain models of its smartwatch in the U.S., following a federal trade agency’s decision. The U.S. International Trade Commission’s ruling, which found Apple in violation of a competitor’s patents, forces the tech giant to halt sales of the Apple Watch Series 9 and Apple Watch Ultra 2 starting December 21 online, and post-December 24 in stores. This move comes at a critical juncture for Apple, aligning with the peak holiday shopping season.

Patent Dispute and Market Response

The dispute centers around Apple’s alleged infringement of patents held by medical-technology company Masimo, particularly concerning a blood-oxygen sensor in the Apple Watch. Apple’s shares dipped slightly following the announcement, with the company expressing disagreement with the order and exploring legal and technical alternatives. Masimo, on its part, has emphasized the need for compliance with the law by all entities, regardless of their size.

Future Strategies and Settlement Options

Apple has faced several options in response to the import ban. These include potentially settling with Masimo, though this could set a precedent for similar future claims. Alternatively, Apple could update the watches’ software to avoid using the contested technology. Given the Apple Watch’s importance in Apple’s product line and health ambitions, a prolonged sales halt seems unlikely.

Minimal Impact on Holiday Sales

Analysts predicted that the sales halt, beginning after Christmas Eve, is unlikely to significantly affect Apple’s holiday sales. However, if extended, it could impact the company’s performance in 2024. This situation unfolded as Apple navigates various challenges, including impending European regulations affecting its app ecosystem and scrutiny over its lucrative deal with Google.

Broader Business Implications

The sales pause added to the series of challenges facing Apple, including legislative changes in Europe and potential impacts on its app-related revenues. Additionally, the company’s search arrangement with Google and its market position in China are under scrutiny, posing further obstacles as Apple heads into 2024.

 


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