Apple Watch patent concerns persist despite sales ban suspension, says DIGITIMES Research

Brandon Fang, Taipei; Jingyue Hsiao, DIGITIMES Asia 0


Following the US International Trade Commission's order barring imports and sales of Apple Watch that infringes the blood oxygen patent held by Masimo, Apple was allowed to temporarily resume sales as the ban is paused, which is waiting for a ruling on January 12. Despite the temporal suspension of the sales ban, concern remains for Apple regarding the health patents, according to DIGITIMES Research.

According to DIGITIMES Research, health features rank among the most critical functionalities for smartwatch users. Apple introduced blood oxygen sensing in its Apple Watch Series 6 in 2020. Currently, the sales ban affects models like the Apple Watch Series 9 and Ultra 2 with this feature.

The impact of the Apple Watch sales suspension on Apple can be observed from two perspectives, according to DIGITIMES Research.

Financially, the Apple Watch falls under Apple's Wearables, Home, and Accessories product category, a segment accounting for about 10% of the overall revenue. This category includes revenues from products like AirPods and Apple TV. Additionally, the ban is limited to the US, where Apple generated roughly 43% of its total revenue in 2022. Consumers in the US could potentially purchase the product from overseas, thus estimating the ban's impact on Apple's total revenue at only 1-2%.

However, the primary concern likely arises from market demand. According to a Huawei and Ipsos survey, blood oxygen is a key function for 20% of smartwatch users, and 21% of users check their blood oxygen levels daily. Understanding health conditions through smartwatches constitutes a primary use for these devices. Therefore, resolving the patent issue related to blood oxygen sensing is crucial for Apple.

The technology for measuring blood oxygen in smartwatches involves using optical sensors to measure reflected red and infrared light from blood vessels under the skin before algorithms calculate the blood oxygen levels. Apple may try to bypass Masimo's patent using software algorithms. However, Masimo's CEO Joe Kiani mentioned that their patents encompass software and hardware integration, increasing uncertainty about Apple's ability to bypass it.

In addition to the blood oxygen patent, Apple was also ruled to infringe AliveCor's ECG patent at the end of 2022. Legal disputes regarding health patents suggest potential concerns for Apple's health-sensing technology within the Apple Watch.

According to Statista, Apple Watch dominated the US smartwatch market with a market share of nearly 60%, more than doubling the share of the second-ranking Fitbit. However, without health sensing functions, it might affect the Apple Watch's market share in the US smartwatch market.

Despite the sales ban's relatively small impact on Apple's revenue, blood oxygen sensing is a crucial consumer-desired function. The focus remains on whether the ban will be reinstated, whether Apple can circumvent Masimo's patent through software, and whether Apple will adopt different technologies or designs in subsequent Apple Watch hardware and software to address the patent issue.