Rumor: Is Apple Plotting a Sound United Buyout From Masimo?

A tense proxy war in Masimo’s board rages between founder/CEO Joe Kiani and activist investor interests from Politan Capital Management. Both sides have been lobbing filings to shareholders aimed at discrediting the other prior to a pivotal Annual General Meeting slated for July 25th (may get delayed to August/September 2025) that threatens to see Kiani step down as leader of the board. One interesting filing, the details of which are confidential, claims someone at Masimo is holding an offer to buy Masimo Consumer’s audio properties, a source of much consternation within the company's board. The brands we all know and love, including B&W, Denon, Marantz and many more are unfortunately being used as a bargaining chip in a Masimo leadership power struggle. We don’t know the identity of the prospective buyer or the price they’re willing to pay, but a recent article by David Richards at Australia’s Channel News says that the face behind the mask is rumored to be Apple Inc. An even more scandalous rumor says that Apple may be behind the strife in Masimo’s board. 

But before we delving into rumors and what Apple may do with a portfolio that includes many of the most beloved hi-fi brands on Earth, a quick timeline on how Apple and Masimo got here:

Masimo’s Foray into Consumer Markets & Apple Competition

• Feb 15, 2022: Sound United Announces Masimo Acquisition 

Masimo, a hospital technology company bursts into hi-fi after buying Sound United’s brand portfolio for $1.02B. Surprise was an understatement as Masimo was known more for non-invasive medical monitoring than monitoring S/N ratios. CEO Joe Kiani made compelling statements at the time about his company’s foray into consumer markets needing established distribution channels and supply chains. But sections of Masimo’s board remained unconvinced.

• December 18, 2023: Apple Watch & Masimo IP Infringement Case 

Masimo scored a court victory over Apple when the U.S. International Trade Commission ordered Apple to halt U.S. sales of its new Series 9 Ultra 2 Apple Watch due to an ongoing patent infringement case. Masimo claimed that Apple used its patented blood oximeter technology found in its own W1 Sport watch. Last December the patent infringement case against Apple had already spiralled into a massive legal battle with Apple documented by Ted at Strata-Gee.

• March 22, 2024: Board Authorizes Creation of Masimo Consumer 

The “split” heard ‘round the audio world feeds speculation of an imminent sale. The “official story”; leadership found it prudent to create a spin-off company consisting of Masimo’s consumer-facing products. The goal was to keep the new company’s financials separate from the core hospital supply business. However, Masimo has never officially announced an intention to sell, and it does not appear to be part of founder/CEO Joe Kiani’s plan.

Masimo Founder/CEO Joe Kiani Faces Uncertainty

Although building Masimo into a successful company has been the life’s work of Joe Kiani, he isn’t just a businessman. Kiani formed Masimo as an electrical engineer with a vision to bring technology to the Patient Safety Movement, also founded by Kiani. The goal of the Patient Safety is nothing less than saving lives by mitigating hospital errors, a too often overlooked issue that can hurt patients even the best hospitals. The result has been Masimo’s focus on non-invasive medical monitoring and digital communication technology that makes hospitals safer, cleaner and better able to provide immediate status updates for any patient. 

Unfortunately, Kiani faces turbulence at the company he founded and its Annual General Meeting on July 25th could see him step down as Chair of his company’s Board. The loss of Kiani as CEO would also be a loss to the audio industry because it would likely see the sale of Masimo Consumer's audio brands to a mysterious prospective buyer.

Apple Corporate Espionage Theory

Amanda Pedersen at the Medical Device & Diagnostic Industry publication says Apple may have a hand in Masimo’s recent leadership struggles. She says the divisions in Masimo exec team and its activist investor could be part of a corporate “hit job” by Apple in retaliation to its court losses. It seems difficult to believe that Apple would engage in this behavior as Apple is well known to be a company on the side of virtue. After all, this company is tight with Mother Nature as revealed in its 2023 Wonderlust Event.

Tim Cook & Octavia Spencer star in the 2023 Apple promo where Apple commits to Net Zero across its supply chain by 2030. Apple can't be the baddies, right?

Ted Green from Strata-Gee.com has provided insights into the goings-on in Masimo and its Apple legal case as well as its divisions in the board. Green's article noted the filing war at Masimo, one of which revealed terms had been discussed with a joint venture partner interested in buying a majority stake in Masimo Consumer’s audio brands. While the terms and identities around these discussions are protected by confidentiality, Richards at ChannelNews.co.au says Masimo insiders claim that the JV partner is Apple Inc. 

It’s like a high-stakes Scooby Doo episode where the Mystery Machine teenagers pull off the mask to reveal Tim Cook! 

What If Apple Takes Masimo Consumer?

The confidential deal for Masimo Consumer appears to be exclusive to the former Sound United audio brands and doesn’t mention the consumer medical devices that are also part of Masimo’s spin-off business. However, if the JV partner is Apple - why wouldn't they look for a deal involve resolving the ongoing patent disputes? That’s the $3 billion question! While Masimo’s Sound United asset was a $1 billion purchase in 2022, the sum involved in Masimo’s trade secret misappropriation and patent infringement trial against Apple Inc amounted to $3 billion. It would seem to be the larger priority for Apple, and it would mean a significant boost for Apple to legally use Masimo’s technology. This would give its new Apple Watches true FDA-approved medical monitoring in the U.S. market.

The instinct of any audio fan would surely be to cringe at the thought of an Apple takeover of the Sound United brands. Apple’s only acquisition of a well-known audio company was its 2014 acquisition of Beats by Dre, and you’d have to squint real hard to see buying Beats headphones as an interest in true hi-fi audio. Beats was known for slick marketing, not breakthroughs in personal audio reproduction. And how did that Apple acquisition work out for Beats? 

In 2014 Beats headphones were the conspicuous accessory for fashionable celebs and teenagers alike, but it's all but disappeared as a well-known brand since joining Apple. For fans of the legendary Sound United brands, now Masimo Consumer, Apple ownership is not a pleasant thought. 

A Possible Bright Side

Perhaps today’s Apple has a yearning to recapture the company’s bygone tradition of no-compromises engineering merged with functional design, a throwback to Jobs-era Apple. Brands like Denon, Definitive Technology, Bowers & Wilkins, and Marantz would certainly bring these qualities in unfiltered barrel strength if permitted to operate with relative independence. Provided they are acquired to operate independently, Apple could be a better option than seeing these beloved names in audio cast off to a private equity firm like Red Lobster. 

A New, More Hi-Fi Apple Inc

There are some undeniable signs of improvement in Apple audio. Foremost is Apple Music's effort to differentiate itself from the spotty competition by going lossless and it even added a hi-res audio library. Could the company be turning over a new high-fidelity leaf?

Another positive sign is that outside of Dolby Labs, Apple is easily the biggest booster of Atmos Music, which enjoys excellent reproduction in Marantz and Denon. Both B&W and Denon make wireless personal audio, including headphones and in-ear monitors that could bring built-in premium sound quality to future versions of Vision Pro and any other Apple devices.

Hypothetical Marantz-Edition Apple TV 4K with sound quality as good as its video

Maybe we'll see hi-fi grade Apple devices like an Apple TV that's capable of streaming Apple Music's hi-res library at the file's native resolution instead of being downgraded to 48kHz. What could an evolution in Apple AirPlay 3 look like if teamed up with Heos? Perhaps this relationship could be the bridge to true hi-res wireless sound over Wi-Fi. If the future of sound is wireless, perhaps Apple could bring competition to Qualcomm on another front, outside of mobile processors. This would require Apple to overcome its allergy to advanced Bluetooth audio codecs thanks to Qualcom and its aptX technology, Bluetooth sound has moved well beyond the capabilities of AAC, a memo Apple has yet to receive. But maybe Apple can finally get to work on a new ALAC (Apple Lossless Audio Codec) for Bluetooth with the help of true hi-fi engineering.

An upgrade to Apple AAC would sound great in future Bowers & Wilkins wireless headphones!

If things go right, maybe an Apple takeover of the Masimo Consumer audio brands could offer some positives and interesting new leading-edge audio technologies. But only if Apple grants Masimo Consumer’s audio brands the kind of independence that we can only assume they enjoy today under Masimo CEO Joe Kiani. But whatever happens next at Masimo, we can only hope the Masimo Consumer audio brands aren't given the Endless Shrimp deal treatment by private equity firms!