Apple's Ban On Smartwatches Could Result In Sales Loss Exceeding $300-$400M, Says Dan Ives: 'Couldn't Have Come At A Worse Possible Time'

In a surprising turn of events, Apple Inc. AAPL has decided to suspend the sale of its latest smartwatch models, an action that could potentially cost the company up to $400 million.

What Happened: On Monday, Apple announced its plan to halt two of its Apple Watch models — the Series 9 and Ultra 2 versions — for US customers, starting Thursday online and Sunday in stores.

This suspension, a response to an October ruling from the International Trade Commission (ITC) over a patent dispute with Masimo, a medical technology company, is projected to impact Apple’s holiday sales by around $300-$400 million, according to Wedbush Securities analyst Dan Ives, reported Business Insider.

This figure, albeit a small fraction of the estimated $120 billion in sales for the October-December period, is a setback. The timing of this sales suspension, as Ives notes, “couldn’t have come at a worse possible time.”

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Despite this, Apple’s shares remain stable, close to their record high from the previous week. A representative for Apple stated the company “strongly disagrees with the order” and is currently investigating legal and technical options to ensure the availability of the Apple Watch to its consumers.

Why It Matters: This patent dispute with Masimo is not the first for Apple, which has been incorporating more medical technology into its watch models. Apple’s engineers have been working to alter algorithms that measure users’ blood oxygen levels, a feature that Masimo alleges infringes on its patent.

The company’s ongoing patent issues had industry experts speculating about potential impacts on its revenue. However, as noted by equity analysts Samik Chatterjee, CFA, and Joseph Cardoso of JPMorgan, the financial impact on Apple may not be as severe as initially feared. This patent tiff raises questions about future licensing agreements or acquisitions in the field for Apple.

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