Apple's smartwatch business self-rescue: Engineers racing against time to modify algorithms

As the deadline for the unprecedented ban on Apple's latest smartwatch approaches, Apple is racing against time to find solutions, including software fixes and other potential remedies.

According to an article on the Wall Street CN website this week, medical technology company Masimo filed a complaint with the US International Trade Commission (ITC) in 2021, alleging that Apple infringed on its patents related to measuring blood oxygen levels. In October of this year, the ITC ruled in favor of Masimo, stating that Apple had indeed infringed on its patents. As a result, Apple will cease sales of its latest smartwatches, the Apple Watch Series 9 and Ultra 2 models, in the United States this month.

Currently, Apple engineers are scrambling to modify the algorithms used to measure users' blood oxygen levels on the devices. Insiders reveal that they are adjusting the techniques used to determine oxygen saturation and the way data is presented to customers.

Internal work at Apple indicates that the company believes making changes on the software side, rather than more complex hardware modifications, will be enough to bring the Apple Watch back to the market. However, analysts point out that the core of Apple's dispute with Masimo's patents is primarily hardware-related, including how light is emitted into the skin to measure oxygen levels in the blood.

Masimo stated that the decision to ban certain models of the Apple Watch shows that even the world's most powerful companies must comply with the law. The company has previously stated that software fixes alone are not enough to resolve the issue; hardware changes are also necessary.

Apple also faces the challenge that the actual implementation of any solution may take a long time. Apple's internal software testing process is lengthy, and the company needs to ensure that any changes do not disrupt other functions of the smartwatch. Considering the medical purpose of the watch, additional testing may be required for the relevant adjustments. Insiders estimate that if Apple needs to remove hardware from its devices, it could take at least three months to produce and ship the new models, not to mention the time required for approval from customs agencies.

Apple has other potential solutions, such as reaching a settlement with Masimo, although Apple is generally reluctant to take this approach. The two companies also do not appear to be engaged in discussions on this matter. For now, Apple is focused on modifying its technology and trying to win the support of regulatory agencies.

Apple is also exploring a range of legal and technical options.

An Apple spokesperson stated that the company is working hard to submit a solution to US customs agencies so that the modified product can be reintroduced to the market.

According to industry insiders cited by the media, it is rare for a patent dispute to escalate to the level of the Apple Watch case. Usually, such disputes are resolved before reaching this stage, and even if they do, they are often used as bargaining chips in settlement negotiations. Considering the breadth of Masimo's patents, it may be challenging for Apple to resolve this dispute by simply modifying the software. However, Apple is not without a chance of success and can make a reasonable argument that software controls how the device operates. Apple's latest version of the smartwatch has been withdrawn from the market, right in the midst of the important sales peak season and holiday period. The demand for Apple to cease selling its core product in the United States is an unprecedented blow, especially considering the timing.

After 3:00 PM Eastern Time on December 21st, the latest version of Apple's smartwatch will no longer be available for order on the company's official website in the United States. After December 24th, Apple's physical retail stores will no longer have inventory. Importation of the related products into the United States will be prohibited after December 25th.

Currently, Apple's retail stores have also made corresponding changes, with new slogans. Although they are still promoting the Apple Watch smartwatch, they do not display photos of the soon-to-be-banned Series 9 and Ultra 2. The lower-end SE watch from Apple is still available for sale.

Analysts predict that the business scale of Apple's smartwatch in the 2023 fiscal year will be approximately $17 billion. Health and safety features are important selling points of the Apple Watch and are the core drivers of growth in this category. Although the business scale of the smartwatch is far smaller than that of the iPhone, it helps to keep people locked into Apple's ecosystem.