Apple Out Of Time On Smartwatch

Just in time for Christmas, Apple is hitting a bump in its ability to sell several versions of its popular smartwatch. 

Shares of Apple fell more than 1% before slightly rebounding on Monday after the company said it will halt sales of its Apple Watch Series 9 and Apple Watch Ultra 2 in the coming days.

The move, which comes after a ruling by the International Trade Commission, could create a run on watch sales in the week before Christmas.

The sales pause comes amid a critical holiday season for Apple after the company has faced flagging sales and a variety of business challenges at home and abroad, according toThe Wall Street Journal. For its fiscal 2023 that ended in September, overall sales were down for the first time since 2019.



To avoid a complete ban on sales, Apple had two months to cut a deal with Masimo to license its technology, or it could appeal to the Biden administration to reverse the ruling.

But Joe Kiani, the chief executive of Masimo, said in an interview with The New York Times that Apple had not engaged in licensing negotiations. Instead, he said that Apple had appealed to President Biden to veto the I.T.C. ruling, which Kiani knows because the administration contacted Masimo about Apple’s request.

Apple will remove the watches from its online stores by Dec. 21 and from physical stores by Dec. 24. However, the ban only applies to direct sales from Apple. Other retail locations can sell them until they are out of stock. 

The White House had 60 days to review the restrictions, per ITC policy, or until Dec. 25, but Apple said it started the pause early to ensure it is compliant with the order if the ITC ruling holds up, according to the CNBC.

The Apple Watch is the world's best-selling smartwatch, according to Counterpoint Research. The Apple Watch accounts for nearly $20 billion of the company’s $383.29 billion in annual sales, according to Bernstein Research.

“The Apple Watch line is one of Apple's most successful accessories. It not only provides the company with user lock-in by getting consumers to stick to its ecosystem of products,” according to Yahoo Finance. “It’s also a means to get users to sign up for the Apple Fitness+ subscription service.”

The decision to pull the watches comes after the International Trade Commission granted medical device maker Masimo cease-and-desist and limited exclusion orders preventing Apple from importing and selling the Series 9 and Ultra 2 in the U.S. in October.

"Apple strongly disagrees with the order and is pursuing a range of legal and technical options to ensure that Apple Watch is available to customers," the company said in a statement.

People who have already bought either of the two Apple Watches in question will not have any issues with their product, according to Apple, and there is no change to the availability of either model outside of the U.S., per the CNBC.

“The company has several potential paths open to deal with the ban,” according to The Wall Street Journal. “Apple could still settle with Masimo, though settling could open the door to more challenges on similar grounds. The company could also make changes to the Apple Watches through a software update that could avoid using the contested technology.”

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