Some suggested that the launch of the Apple Watch, especially the 18-carat gold Apple Watch Edition with its £8,000 price tag, would signal the beginning of the end for the likes of Rolex, Breitling and Tag Heuer. After all, here was a luxury, wearable device that didn’t just tell the time but also maintained contact with the digital world. How could the centuries-old Swiss watch industry possibly compete?
However, although the Apple Watch has been well received and generated strong sales, the major luxury watch manufacturers show little indication that their core business will suffer. Indeed, sales of both new and collectable timepieces remain strong and luxury wristwatch popularity remains high. As Jean-Claude Biver, CEO of Tag Heuer put it: "You don’t buy a $20,000 watch to tell you what time it is, you buy it because it is a piece of art.”
Despite this, Tag Heuer plans to meet the challenge of the Apple Watch head-on. In November the company will unveil the Carrera Wearable 01. Created in partnership with Intel and Google, it is “the world’s first luxury Android Wear smartwatch”. No prototypes have yet been seen but the device is expected to have a battery life of 40 hours, more than double that of the Apple product.
Niche
Breitling has also entered the smartwatch market, albeit in a more specific niche. The B55 Connected is a traditional Swiss watch that can be controlled using an iPhone app. It is primarily aimed at pilots wishing to record their flight times. Despite being a specialist product, it provides evidence of how some manufacturers are likely to adjust their products in order to stay relevant to the next generation of consumers.
Montblanc is taking yet another approach. The TimeWalker Urban Speed e-Strap features a screen that delivers calendar reminders, text and email previews and notification of incoming calls. It works with both Apple and Android phones and, because the technology is built into the strap rather than the watch, it can be used with almost any brand of timepiece. The e-Strap approach provides a way for Swiss watchmakers to compete with Apple without having to alter their core products in any way.
Perhaps the most interesting response to the Apple Watch comes from the best-known name in the business; Rolex. Although third parties have released Rolex smartwatch concepts, the company itself has given no indication that it intends to pursue such an endeavour and will instead focus on its traditional product.
Affluent
Analysts tend to agree that the Apple product has the ability to stimulate the market as a whole, introducing the idea of a wristwatch to a generation that has grown up telling the time on their mobile phones. As these people become more affluent, Rolex hopes to continue to be the product they aspire to own.
There may even be room in the marketplace for everyone to get along quite comfortably. Those who can afford to do so are likely to adopt a two-watch solution; an Apple Watch while at work or at the gym and a more traditional luxury watch for work and social activity.
What still remains to be seen is the longer term staying power of the Apple Watch. While a well-maintained Rolex or Breitling will last for decades and retain its value well, the value of the Apple Watch will fall as soon as the company announces a second generation product, something Apple tends to do on an annual basis.
