Bloomberg has reported that Apple,
facing an imminent US ban on its smartwatches, is strategising a rescue mission for its $17 billion business through software fixes and potential workarounds. Engineers at Apple are reportedly urgently modifying algorithms on the device to address concerns raised by Masimo Corp., which alleges patent infringement related to the blood oxygen level measurement feature. The company aims to adjust how the technology determines oxygen saturation and presents data to users, according to sources familiar with the matter.
This engineering effort is considered high-stakes for Apple, as a ban imposed by the International Trade Commission (ITC) is set to take effect on December 25, impacting one of Apple's major revenue streams in its home country. While Apple could potentially settle with Masimo, the focus, for now, is on altering the technology to gain regulatory approval.
Preparations are underway, with Apple planning to cease sales of the affected watches on its website on Thursday and remove them from physical stores by December 24. The company is reportedly confident that software changes, rather than a more complex hardware overhaul, will be sufficient to address the dispute.\, Bloomberg reported.
In response to the impending ban, Apple has begun adjusting promotional materials in its retail outlets and is exploring legal and technical options. The company believes it can submit a software workaround to the US customs agency for approval to reintroduce the product to the market.
Masimo, however, contends that a software fix is inadequate and insists on necessary hardware changes. The ITC's ban, if upheld, will restrict Apple's ability to sell the affected smartwatches in the US, posing a significant challenge given the company's reliance on overseas suppliers for components and assembly.
Apple's smartwatch business, generating approximately $17 billion annually, has become a substantial part of its revenue. Analysts estimate that fiscal-year revenue for the Apple Watch reached $16.9 billion in 2023, marking a significant growth driver for the company. The potential ban could disrupt this growth and impact users locked into the Apple ecosystem.
While Apple is concurrently working on both hardware and software solutions, the timeline for implementing new technology, subject to extensive internal testing and regulatory approval, remains uncertain. If hardware removal is deemed necessary, production and shipment of new models could take at least three months, with additional time required for customs agency approval.
The White House can veto International Trade Commission decisions, and it remains unclear whether Apple will receive a reprieve. The US Trade Representative, Katherine Tai, is reportedly reviewing the situation, weighing various factors in the dispute. Masimo, based in Irvine, California, has expressed the view that the ITC's judgment should be respected, emphasising that even the world's most powerful company must abide by the law.
