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 But luxury and fashion groups Richemont, LVMH, Swatch Group and
Guess Inc 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 first 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 used to telling the time with
their phones, rather than on their wrists.
"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 are 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 which is about to toss a smartwatch
on the market," Nick Hayek, chief executive 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 line-up of watches will go on
sale in April. The entry-level Apple Watch Sport will start at $349,
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 news 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
re-charging is considered a big drawback.
LUXURY OF TIME
The threat of the smartwatch may also be limited due to 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.
Montblanc, owned by Richemont, announced in January the launch of
the TimeWalker Urban Speed e-strap watch, which combines a
traditional mechanical watch with an interchangeable strap
containing a Bluetooth connected device.
That offers "the best of both worlds", according to Berenberg's
luxury goods analyst, Bassel Choughari. He said this is less risky
than the strategy of LVMH's Tag Heuer, which has partnered with an
as-yet-undisclosed U.S. tech company to produce a watch outside
Switzerland.
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"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 of the danger to brands.
Guess Inc 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 says these will be compatible with thousands of
existing mobile phone apps and can be controlled from the watch
using voice activated commands.
Fossil Group, another U.S.-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 Corp.
It too early to know whether the Apple Watch, whose price tags run
as high as $17,000 for its yellow or rose gold models, will steal
share from the Swiss industry, which sells about 30 million watches
a year.
The threat that Apple will cannibalize 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 percent hit to annual
revenue, according to a calculation by Barclays analysts.
Watch connoisseur Steve Baktidy says he is 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 auto body repair
shops in New York and two dozen watches by luxury brands including
Patek Philippe, Audemars Piguet, Breitling and Omega.
(Additional reporting by Pascale Denis in Paris, Tom Miles in Geneva
and Harro ten Wolde in Frankfurt; editing by David Stamp)
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