The Six Five team discusses the Apple Watch Import Ban.
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Transcript:
Daniel Newman: I know you’re an Apple Watch wearer. Do you have it on right now?
Patrick Moorhead: I do. Tracking as we speak along with my Oura ring.
Daniel Newman: Pat is constantly monitoring himself, keeping himself in a spiral of doom. He is certain of his own mortality, and he wants to make sure that he’s got data to prove it every single minute of the day.
Patrick Moorhead: Dude, are you kidding me? I need to know when to inject the unicorn blood into my system every few hours.
Daniel Newman: I know. I prefer to be surprised. You prefer to be in the know, but either way, what happened?
Patrick Moorhead: Yeah, so a couple of things going on here. So you have Apple that has good innovation, but they’re bullies to their suppliers, and they on occasion steal other people’s intellectual property. It’s been proven in court many, many times. This is not just opinion, it’s just a fact. And what they did is they stole intellectual property and hired the CTO and some more people from a couple called Masimo when they were in negotiations for a licensing deal, an acquisition or even them buying sensors. And then suddenly, Apple shows up with an Apple Watch with oxygen sensor capabilities on it after hiring Masimo’s people. Masimo takes them to court, it’s a multi-year battle, and they end up not only winning at the ITC, but also, they won on appeals at the ITC. And ITC issued a ban on importation from Apple Watches that are made in China, and also I think a few of them are made in India into the US.
By the way, the official word has not come out yet, I just want to be very clear on that. But by Apple’s actions, which they’re going to stop selling it on the 21st online and then removing inventory on the 25th I think is a pretty good indication on where this is headed. Now, ITC ruling, its apples have not always stuck, right? We saw Obama overturned one. There was a judgment that the ITC said that Apple was ripping off Qualcomm’s patents. I think at the ITC, it was one out of six. Qualcomm asked for an injunction and our wonderful administration said, no, us moving forward and selling iPhones is more important than your intellectual property and the ban never happened. By the way, it did result in Apple and Qualcomm coming together.
So I think this is a really big deal, and what I’ve been telling a lot of the reporters that I’ve been doing interviews with is I can’t tell you when or how, but I can tell you who has the power in here and where the motivations might be. And that this is much more important to Apple to get this resolved quickly than it is to Masimo who has been spending probably $20 million on lawsuits trying to win against Apple. And I don’t think that Masimo is going to be quick to negotiate some licensing deal either versus Apple where I think you’re driving 17 billion in Apple Watch sales annually, and most of them are sold in the United States. Apple needs to fix this. They don’t have the power here. They have so much more to lose than they have to gain. I’ve seen some people say, “Oh, it’s just the SE, right?”
But here’s the deal. Apple got all these people interested in sensing oxygen and primarily around the, are you sick? Do you have sleeping problems? Type of thing. They made the bed and now they’re sleeping in it. Two potentials here. There’s also a thought that Apple can issue a software fix, but guess what? The lawsuit and the judgment against Apple wasn’t just about software, it was also about the hardware. They could disconnect the oxygen sensor, which is a potential, but in my estimation, they likely need to send these watches and have them reworked, have the oxygen sensor removed, and potentially come up with a new model of watch that’s the same Ultra 2 and the other ones with SPOX and have those sensors removed as well.
So listen, this could get fixed this week, it could get fixed sometime in 2024, it might never get fixed which would be weird. All the applications like my sleep watch stuff that uses SPOX and my gosh, I mean all the applications that use it even on my phone, and I’m not the most in shape person, but Athlytic, SleepWatch, Withings, iBreathe. I think even the Calm app uses it. I could be wrong, but yeah, Apple needs to fix this and need to fix it quick.
Daniel Newman: Yeah, you got a lot of good detail there so I’m not going to spend a ton of time on this path. The things I’ll double click on are one, there is a genuine and general misconception about Apple as always being the innovator. Apple is the implementer, and this is a good example of how Apple is great at putting together other company’s innovations and creating products that are more usable, more desirable, and better marketed, and this has been the company’s history for a long, long time. You go through the history of whether it’s MP3 players turning into iPods, whether it’s Apple iPhones becoming something built out of the amalgamation of Blackberries and various different early iterations of smartphones and other phones that attempted to put computers on smaller surfaces.
Patrick Moorhead: Hey, how about this one? Imagination Technologies was GPU, they hired a bunch of the engineers, and then they made Imagination a deal they couldn’t refuse on licensing. So this is Imagination all over again.
Daniel Newman: And their history and pedigree is, in these situations, if they don’t get what they need or want, they certainly have been known to be a bit of a bully. I’m pretty sure Imagination never quite recovered despite getting quite a bit of attention for what had happened. By the time they got any attention support and anyone really took notice, Apple had already done the deed and it was-
Patrick Moorhead: Hey, remember the company Apple spun up as a supplier to put special coating on the top of Apple Watches? Their stock went to 1,000 X. And then Apple’s like, “Eh, no, I don’t think so. I’m going to do it myself.” And then destroyed the guy. I mean, there’s so many examples. They tried to build the same BS to Qualcomm, right? Steal their IP, not pay them for two years. Anyways, I’m sorry, you were talking.
Daniel Newman: No, it’s just fortunate that it seems that there is a economy of scale by which they can’t get away with it, but these smaller companies that are in the hundreds of millions even, which by the way is a large company by most consensus, but Apple can literally suffocate them, and that’s what has happened in the past. Having said that, there’s a lot of people out there that love this technology, want these devices, and this is the most popular watch on the planet. Just so you’re clear, Apple is the world’s number one watchmaker by revenue and by volume, well above Rolex in case anybody wondered. They need this continued innovation and technology to be able to continue to grow their market, so I do feel they will get it rectified, and it probably won’t be as big of a concession as they probably should have to make.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
