Apple Prepares Project to Save $17 Billion Watch Business in the Face of US Ban » Today Latest Stories

Apple Inc., a few days before the US ban on its smart watches, is planning a $17 billion business rescue project that includes software improvements and other potential issues.

Engineers at the company are racing to improve the algorithms on a device that measures the amount of oxygen in a person’s blood – something that Masimo Corp. argued that it infringed its patents. They are changing the way technology changes oxygen levels and provides information to customers, according to people familiar with the process.

It’s a high-tech project unlike anything Apple has ever done before. Although the iPhone maker’s products have already been banned in some countries due to legal disputes, this law will affect one of Apple’s biggest income generators in their country – at Christmas. Absent a last-minute White House veto, the ban imposed by the International Trade Commission will go into effect on Dec. 25.

Apple may settle with Masimo, although this is a path they don’t like to follow. And the two companies seem to have done nothing. Currently, Apple is focusing on improving its technology and trying to win the favor of regulators.

If the ban does not happen, Apple is working on various legal and technical issues. Already, it has begun to prepare stores for change. It sent new signs to its stores promoting the Apple Watch without showing images of the Series 9 and Ultra 2 – the two models targeted by the ban. The company’s low-end SE watch would still be available.

Apple plans to stop selling the banned watches on its website on Thursday and remove them from its approximately 270 brick-and-mortar stores by Dec. 24.

Operations within Apple indicate that the company believes that software changes – rather than hardware fixes – will be enough to bring the device back to shelves. But the patents at the heart of the debate have to do with hardware, including how light bounces off the skin to measure the amount of oxygen in a person’s blood.

A spokesperson for Apple said the company plans to submit a request to the US Justice Department, which is in charge of approving changes to allow products to return to the market.

Masimo said that programming will be an incomplete process. “Technical devices need to change,” the medical device maker said.

The ITC ban will act as an import ban that will make it impossible for Apple to sell the device in the US. The company relies on exporters for small watches and its collections.

Such disputes are often settled before they get to this point, said Evan Zimmerman, co-founder and CEO of Edge, which develops patent applications.

“This kind of conflict that causes people to ban imports is rare and is often used as a way to deal with the problem,” he said. It may be difficult for Apple to settle the dispute with software tweaks, given Masimo’s large number of patents, Zimmerman said. But Apple can make a valid argument that the software controls how the device works, he said.

Although the company is working on both hardware and software improvements, bringing new technology to market takes time. Apple’s internal software testing process is long, for good reason. The company has to make sure that any changes do not break the other features of the smartwatch. The changes may also require further testing depending on the clinical purpose.

The device makes about $17 billion a year. At a time when Apple needs to remove its hardware from its devices, getting new models manufactured and shipped could take up to three months, according to one person familiar with the company’s operations. And it doesn’t take long for the customs agency to approve the move.

The blood oxygen feature was first added to the Apple Watch in 2020 with the Series 6 model. At that time, the coronavirus epidemic was spreading and some doctors used blood oxygen to see how the virus affects the breathing of patients.

This article monitors the number of people throughout the day. The user can also take a reading here, which takes about 15 seconds. Most patients seek levels between 95% and 100%.

The ability was also included on the Apple Watch Series 7 and Series 8. Apple stopped selling the Series 7 when new models were released, but the Series 8 remains as a refurbished device. If the ban goes into effect, the sale will also have to be stopped.

The ITC ban only affects Apple’s direct sales channels, so other retailers such as Walmart Inc., Best Buy Co. and Target Corp. can continue to provide this device. Walmart and Best Buy both said Monday they don’t plan to quit.

Apple has been using health and safety to market its smartwatches, which has helped turn the line into a major driver of growth in recent years. Analysts estimate that it will generate $16.9 billion in Apple’s revenue in 2023, up from $9.1 billion a year five years ago.

While it’s a fraction of the $200 billion made by the iPhone, the watch also helps keep people out of Apple’s ecosystem.

It’s unclear whether the White House will ultimately grant Apple a refund. The administration said US Trade Representative Katherine Tai is monitoring the comments and carefully considering all aspects of the dispute.

The White House has the power to block ITC decisions, and the Obama administration did so by banning the iPhone in 2013 in the US. But the decision stemmed from a patent battle with Samsung Electronics Co. Masimo from South Korea is located in Irvine, California, which means that the government has to choose one American company over another.

Masimo said in a statement that the ITC’s decision “must be respected.” The ban “shows that even the most powerful company in the world must follow the law,” it said.

(Except for the headline, this article has not been edited by NDTV staff and is published from an aggregate source.)