Apple’s smartwatch spurs wrist action
Tech company’s latest device could slice into luxury watchmakers’ profits — or give them a timely boost
TO observers of the secretive Swiss watch industry, its quiet, seemingly passive response to Apple’s plan to attack its centuries-old business could be mistaken for submission before an overwhelming adversary.
But luxury and fashion groups Richemont, LVMH, Swatch and Guess have been busy in the past year tinkering with smartwatches of their own, while aiming to preserve their products’ more timeless appeal.
When Apple Watch was announced last September, some experts dismissed such devices as appealing to a different class of customer — those who prize technology over prestige.
Now analysts and industry executives are starting to think that maybe the Apple Watch juggernaut will stoke sales of luxury timepieces among younger consumers more used to telling the time with their phones.
“Apple has the potential to make the watch cool again,” said CCS Insight mobile analyst Ben Wood, a confessed wearable gadget freak.
“I think the Swiss watch industry is going to be absolutely delighted.”
Swatch, which has dabbled with smartwatch experiments for more than a decade and already makes components for fitness-band wearable devices, has told Swiss newspapers it is gearing up to offer smartwatches of its own in the next few months.
“Apple is not the only company that is about to toss a smartwatch on the market,” Nick Hayek, CEO of Swatch, the world’s largest watchmaking group, told SonntagsBlick in January.
“This is not a threat but a huge opportunity for us and the Swiss watch industry.”
On Monday, Apple revealed that its lineup of watches would go on sale next month.
The entry-level Apple Watch Sport will start at $349 (about R4 300), the standard version at $549 and the high-end “Edition” watch at $10 000.
The upcoming Swatch Smartwatch will include a chip that allows users to make contactless payments with a swipe of the wrist.
It will use long-lasting batteries and work with both Apple- and Google-based phones, according to reports.
While the Apple Watch has drawn rave reviews for many of its features, its limited battery life of no more than 18 hours before it needs recharging is considered a big drawback.
The threat of the smartwatch may also be limited because of its short shelf life as a hi-tech, frequently upgraded product.
An iPhone tends to lose half its value within the first year after it is introduced, while Rolex’s flagship Submariner model has risen in value, analysts at Berenberg Bank noted in a recent report.
In January, Montblanc, owned by Richemont, announced the launch of the Time- MONTBLANC: The TimeWalker Urban Speed e-strap Walker Urban Speed e-strap watch, which combines a traditional mechanical watch with an interchangeable strap containing a Bluetooth-connected device.
That offered “the best of both worlds”, said Bassel Choughari, Berenberg’s luxury goods analyst. He said this was less risky than the strategy of LVMH’s Tag Heuer, which has partnered with an as-yet-undisclosed US tech company to produce a watch outside Switzerland. “It creates a bit of a grey area between Swiss-made and probably made-in-China products, so that could be a bit difficult to manage over time,” Choughari said.
Guess has also announced plans to launch a smartwatch line, called Guess Connect, later this year.
The new models, which come in sporty and jewel-encrusted versions, will link wirelessly to a user’s nearby Apple or Google Android smartphone.
Guess said these would be compatible with thousands of existing smartphone apps and could be controlled from the watch using voice-activated commands.
Fossil, another US-based fashion group, has toyed with smartwatches since 2003.
A year ago, it said it would produce a smartwatch based on Google’s Android Wear software, and, in September, it said it had partnered with chipmaker Intel.
It’s too early to know whether the Apple Watch will steal share from the Swiss industry, which sells about 30 million watches a year.
The threat that Apple will cannibalise existing watch demand is most acute for Swatch, analysts say, because it has the highest proportion of products selling for a few hundred dollars, instead of several thousands, as high-end names do.
If Apple sells 20 million watches in the first year, as some analysts estimate, and all of those purchases divert buyers from other watch brands, Swatch could suffer a 6% hit to annual revenue, according to a calculation by Barclays analysts.
Watch connoisseur Steve Baktidy of New York said he was interested in the Apple Watch, but only as a tech gadget to play with. But he also welcomed efforts by luxury makers to introduce more tech features of their own.
“Absolutely I’ll buy one [from Apple], but it’s not going to replace my everyday watch,” said Baktidy, owner of two dozen watches by luxury brands. —
Apple is not the only company about to toss a smartwatch on the market