What impact will Apple stop selling the new Apple Watch in the United States?

The color red in festivals always represents auspiciousness and joy. But this year, the red that Apple received before Christmas seems far removed from the positive meaning of the color itself.

On October 26, the U.S. International Trade Commission (ITC) ruled that Apple’s Apple Watch Series 9 and Apple Watch Ultra 2 infringed on the medical device company Masimo’s pulse oximeter patent.

The bullet flew for two months and finally landed on the bullseye.

Apple recently announced that starting from the 21st of this month, these two watches will stop selling on the official US website; starting from the 24th, offline sales of the products involved will also be suspended. What a coincidence, this day happens to be Christmas Eve in the United States.

You may be curious about a few questions like me:

  • How could someone as powerful as Apple be today?
  • How does Masimo, a little-known company, have such great capabilities?
  • Why can’t the Apple Watch not have blood oxygen monitoring?

Today, I will use this article to explain to you clearly the beginning and end of the Apple Watch ban, and what impact it may have on you.

A dispute that lasted for ten years

Let’s first get to know the key players in this case, and who they are.

Masimo is a global medical technology company engaged in the development, manufacturing and sales of non-invasive patient monitoring products. Its core business is "pulse oximetry monitoring systems". Our more familiar name is the use of this technology The product "Pulse Oximeter" is Masimo's most famous instrument and has consistently ranked first in sales of similar products in the world.

At the same time, Masimo has nearly 600 issued patents and 310 patent applications worldwide. In other words, this is a very famous company in the field of "non-invasive monitoring", especially "blood oxygen quantitative monitoring".

The focus of this ban is on Masimo's core technology "pulse oximeter". In 2012, Masimo developed an oximeter "iSpO2" that can be directly connected to iPhone devices and transmit data.

In 2013, when Apple was planning the development route of its new product Apple Watch, it discussed cooperation with Masimo. Although I don’t know what the specific conversation was about, it was definitely about cooperation (or acquisition) on the blood oxygen monitoring function. However, the talks Ended without illness.

Interestingly, Apple poached two Masimo executives and key engineers soon after, and the root of the problem was laid.

Two years later, the original Apple Watch was released, and Apple officially entered wearable devices, and in 2020, the Apple Watch Series 6 was equipped with a blood oxygen monitoring function for the first time.

After seven years, Masimo finally caught the "handle" and sued Apple for two consecutive years to the U.S. District Court for the Central District of California and the ITC for infringing on the company's trade secrets with Apple Watch.

The lawsuit lasted for three years and finally came to an end in October this year. The ITC ruled that Apple's infringement was true. Therefore, Apple had no choice but to reluctantly withdraw the two watches that were supposed to sell well during Christmas from official U.S. channels.

The removal of the two watches is estimated to have cost Apple US$300-400 million. Compared with its revenue of US$12 billion in the fourth quarter, this damage may be like "scraping" for Apple. However, one thing needs to be emphasized: Apple Watch accounts for about 1/4 of the U.S. wearable market. Although the current cash loss is indeed a drop in the bucket for the world's largest company by market capitalization, it will be difficult for Apple to affect such a huge wearable market. not nervous.

▲ Apple’s quarterly marketing ratio of each product. Picture from: ITBEAR

Of course, this ban will not cause the spectacle of American friends "buying watches across countries", because the scope of the ban is limited to Apple's official channels, and third-party e-commerce platforms such as Amazon are still selling normally. However, it should be noted that American users will still be affected: products purchased when the ban takes effect will not be able to enjoy Apple’s official after-sales service.

On the other hand, the ITC's ruling is a good start for rights protection companies, because industry giants are no longer "Pizza Hut" in the face of legal disputes. Perhaps more small businesses will be more confident in resisting infringements because of this incident.

After this turmoil, Apple's corporate image has also been greatly affected. Compared with banning one or two products, this kind of impact may be harder for Apple to accept. During the U.S. stock market on Monday this week, Apple's stock price fell as much as 1.6%, which was lower than the U.S. stock market. Before the incident, Apple's stock price had just hit a record high.

Returning to the Apple Watch product line, Apple’s upcoming Apple Watch Series

There was supposed to be an "epic" update on the tenth-generation product, and Mark Gurman revealed that Apple would add "sleep apnea monitoring (snoring)" and "blood pressure measurement" to the new watch. Now due to infringement The verdict is that the two new features will most likely be included in the banned list.

The above is the dilemma Apple is currently in. "Blood oxygen monitoring" is the core of this dispute. Apple would rather accept the suspension of sales but also maintain the technology. Is it really that important?

Health monitoring is not as simple as it seems

Before understanding why Apple Watch is inseparable from "blood oxygen monitoring", let's first take a look at what this technology is and how it is implemented.

Some professional reports on infectious diseases point out that clinical severe disease can be diagnosed when the blood oxygen saturation is ≤93% in the resting state. Prolonged low blood oxygen saturation (hypoxia) will cause chronic damage to various organs, and may also cause serious diseases such as myocardial infarction, cerebral infarction, and pulmonary infarction, and even be life-threatening.

Generally, when it is lower than 95%, we need to be vigilant, and when it is lower than 93%, we need to seek medical attention immediately. Since hypoxia is difficult to be sensed by us at the first time, often when there is a reaction, the body has already suffered a certain amount of damage. Therefore, during the epidemic period of infectious diseases, Monitoring this index is very important.

A major selling point of the Apple Watch Series 6 back then was “blood oxygen monitoring.” Since then, every generation of Apple’s flagship watches has come standard with this feature. Its working principle is to monitor the proportion of oxygen-saturated hemoglobin in human blood through an infrared light emitter under non-contact conditions.

This is similar to the principle of the relevant patent documents published by Masimo: based on visible light and infrared light emitters, emitting light of specific wavelengths into the human body, due to oxyhemoglobin (hemoglobin that carries oxygen) and reduced hemoglobin (hemoglobin that does not carry oxygen) Hemoglobin) has different absorption rates for red and infrared light. By analyzing the absorption of these lights, the instrument can estimate the oxygen saturation in the blood.

It can be said that this technology is one of the foundations of Apple Watch. Now that its foundation has been shaken, Apple is certainly not having a good time.

In the face of the ban, Apple has tried its best to "turn the tide", which is inseparable from the positioning of Apple Watch in the entire Apple ecosystem: "healthy smart wear."

On the one hand, Apple was the first company to popularize the concept of “health monitoring” on watches. The heart rate sensor and health monitoring in Apple Watch Series 3 made Apple Watch the most popular among consumers in those years. wearable devices, so much so that at the end of 2017, Apple Watch dominated the market with a market share of 61%.

Consumers who have tasted the benefits naturally associate "health monitoring" with "Apple Watch" and even smart watches. Therefore, in today's smart watch market, we can see "all-weather heart rate monitoring", "respiration monitoring" and "long-term monitoring". Functions such as "sitting reminder" have gradually become standard.

And Apple, which "eats the crab first", will naturally not give up the technology market it has established.

On the other hand, the implementation of the "health monitoring" function in watches has always been a huge problem.

Big companies such as Apple and Huawei, as well as powerful companies like Masimo, will include the sentence "This function cannot be used for medical purposes" in the official device introduction. Most of the devices currently advertised functions can only be used as "health tracking" and cannot be used for "diagnosis and treatment", but consumers will pay extra attention to such functions when purchasing smart watches.

Not recognized by professionals and needed by the general public, watches of various brands are stuck at a very embarrassing point.

If you can't become a professional, then you will be infinitely close to being a professional. This is the current situation of smart watch competition, and it also indirectly explains the reason why Apple is so obsessed with health functions: whether it is because of its status as a founder, the R&D costs invested in the past ten years, or the competitive pressure of peers and the achievements it has already won. Market share… Apple has countless reasons to hold on to this technology, and of course it hasn't rested these days.

money capability, may be the best solution

Today is Christmas, which also means that the only way for Apple to start selling watches again before the holiday has failed.

After the ban was issued in late October, the Biden administration or the U.S. Trade Representative had a chance to deny the ban during a 60-day presidential review period. This is a feasible method, because this is not the first time that Apple has used a presidential veto to circumvent corresponding sanctions.

In 2013, Samsung accused Apple of infringing its "cellular data" patents with its iPhone 4, iPhone 3G and iPad 2. In the end, then-President Obama vetoed the import ban on iPhones for the following reasons:

  • The “cellular data” chip patent involved is a must-have hardware for mobile phones
  • Worried that the ban will expose Samsung and Apple to unfair competition

Today's Apple is trying to reproduce its previous plan, but comparing the two incidents, it is almost certain that this path will not work.

Unlike the iPhone 4, which had been on sale for 3 years at that time, the two watches banned this time had just been launched for 3 months and were extremely competitive in the wearable market. In addition, the two watches this time were both American companies. The palms and backs of the hands are all flesh.

▲ Masimo W1 smart watch. Picture from: Masimo.com

If there is no rush to re-list it, Apple actually has a lot of "outlets":

  • Temporarily remove infringing features through software updates. The latest news is that Masimo disagrees. They believe that Apple must remove the infringing hardware from the watch before it can resume sales.
  • Negotiate with Masimo as soon as possible to reach a settlement with the contact ban. This is actually the situation Masimo wants to see most. Its CEO Joe Kiani said that they are willing to reconcile with Apple and even work with Apple to improve existing products. But when asked how much settlement money would be needed, Joe declined to answer the question.
  • Wait until 2028, when the patent expires, and Apple can openly install the blood oxygen monitoring function on the Apple Watch. But the price is that there will be a 5-year product display vacuum period, and users who purchased Apple Watch through third-party channels will be almost impossible to obtain an official repair during the entire life cycle of the product.

Taken together, negotiation seems to be a better way, but the negotiation Apple wants may not be limited to paying patent royalties, but will open up its traditional skills: acquisitions.

This is not a joke, "money power" is a common trick of Apple.

By the end of 2023, Apple has publicly announced the acquisition of more than 100 companies. For example, Siri, which we bought in 2010, has been with us until now; in 2014, we acquired the headphone brand Beats for a whopping US$3 billion, paving the way for the future AirPods.

Whether Masimo will also be included in the Fruit Gate, we cannot guess. Although the stubborn Apple has not responded yet, the words of Masimo CEO Joe Kiani in an interview are intriguing:

He described Apple's infringement ban as "the hand that reached into the jar was caught" and the question of whether to cooperate with Apple as "it takes two people to tango."

▲Joe Kiani. Picture from: THE FORBES COLLECTION

It's obvious that his "expectation" can be felt between the lines, but as he said himself, one slap can't make a difference.

Apple, which will never give up on "blood oxygen monitoring" no matter what, how will it participate in this duet?

Those of us who are not affected by the ban for the time being can rest assured to watch this New Year's Eve drama.

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