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Apple (AAPL) Halts Smartwatch Sales Ban Amid Patent Dispute Apple’s Smartwatch Sales Ban: The Rocky Patent Dispute Journey

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Apple AAPL has experienced a rollercoaster ride in the recent patent dispute with Masimo MASI, culminating in a temporary reprieve from a U.S. appeals court. This reprieve now allows the tech giant to continue sales of its flagship smartwatches after facing import restrictions imposed by the U.S. International Trade Commission (ITC).

The import ban from the ITC came as a result of a patent conflict with Masimo, revolving around Apple’s alleged infringement on patents related to medical monitoring technology. The ban primarily targeted Apple Watches featuring blood-oxygen level reading technology, affecting models starting from the Series 6 in 2020.

While the recent court decision provides short-term relief for Apple, the final resolution of this dispute could have significant financial implications for both companies. This legal battle goes beyond accusations of technology theft, delving into aspects such as employee poaching and the strategic positioning of smartwatch offerings.

Apple’s Market Climate

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Apple Inc. Price and Consensus

Apple Inc. price-consensus-chart | Apple Inc. Quote

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Apple’s Battle Amidst Tough Smartwatch Market Competition

The recent developments reflect Apple’s ongoing struggle in the patent dispute with Masimo. However, the impact on its flagship smartwatch sales has caused the company’s shares to underperform compared to the broader Computer & Technology sector, with a 48.7% year-to-date increase versus the sector’s 53.1% surge.

In addition to the legal challenges, Apple also faces fierce competition in the smartwatch market, notably from industry leaders such as Alphabet GOOGL and Garmin GRMN, which are actively enhancing their smartwatch offerings to compete with Apple.

Alphabet, for instance, is riding the wave of success with its Pixel watch series. Recently, the introduction of Pixel Watch 2, equipped with advanced health tracking features, such as a multi-path heart rate sensor, has strengthened Alphabet’s position in the market.

On the other hand, Garmin launched the quatix 7 pro marine smartwatch, boasting a 1.3 AMOLED display, an impressive 16-day battery life, and seamless integration with Garmin marine systems for enhanced water-based activities.

In response to this competitive landscape, Apple has unveiled the Apple Watch Ultra 2 with new features such as the S9 SiP, bright display, and extended battery life. The company has also announced the availability of watch OS 10, which introduces improved features for various workouts and a novel mental health experience within the Mindfulness app.

More than two-thirds of the customers who purchased the Apple Watch during the fourth quarter of fiscal 2023 were first-time customers, indicating the potential for a broader customer base.

Currently, AAPL holds a Zacks Rank #3 (Hold). For a comprehensive list of today’s Zacks #1 Rank stocks, click here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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