The Apple Watch: What Does It Mean For the Swiss Watch Industry?


Apple Watch - smallThe much-discussed Apple Watch will be available at retail this month, with prices starting at $349. So what does the release of the latest and most discussed smartwatch mean for the luxury watch industry in Switzerland?

The Apple Watch — Apple’s first entirely new product line since the iPad and the first since the death of Apple’s visionary founder Steve Jobs — is already widely expected to become the market leader among smartwatches (Click here for info on some of its predecessors/competitors) based solely on Apple’s history. It runs apps, including a fitness tracker, and unlike previous smartwatches, includes a very analog-watch-like device — a “digital crown” on the side that can control the watch’s functions. We cover the details and functions of the Apple Watch here.

The biggest question, both for the aficionados who collect luxury watches and the people who design, build and sell them, is obvious: Does the rise of the smartwatch, and the game-changing Apple Watch in particular, lead to the sequel that no one wanted, namely “Quartz Crisis II?” The Swiss mechanical watch faced off with a similar high-tech competitor in the 1970s and 1980s, when watches equipped with the then-new, Japanese-made quartz movements threatened to render traditional mechanical watchmaking obsolete. The industry managed to recover from those harsh years when the luxury mechanical watch (most still made in Switzerland, but also thriving in Germany and even, to an extent, in Japan) began to be rediscovered as a luxury item and status symbol in the booming 1990s. But any watch-industry veteran who experienced that era will tell you that there was a lot of pain in those intervening years. Will the watch-buying public once again turn away from the traditional and embrace the new high-tech flavor of the month?

 

apple smartwatch
The Apple Watch

It’s always hazardous to try to predict the future, especially in a business as unpredictable as watches. But I tend to agree with Swatch Group CEO Nick Hayek, who, despite his own company’s recent foray into smartwatches with the Swatch brand, anticipates problems with constant software upgrades and needing to replace the watch often. (Click here to hear the man himself speak on the subject.) I also echo the thoughts of our Watch Insider, Alexander Linz, who opines in a recent blog post: “We are talking about two totally different segments, and also a different buyer. It could be that someone who is used to wearing a mechanical watch will now also wear a digital smartwatch, but it will never replace the mechanical timepiece on his wrist. On the contrary, I believe that Apple and all the other producers of smart watches will probably stimulate people who have ever before worn a watch to buy one now, and I could imagine that these people might later start buying other watches, with some of them eventually buying a mechanical watch.”

In short, I believe that high-end mechanical watches have cemented their status as coveted luxury items for a worldwide audience, one that is still growing. No one “needs” an expensive watch, but no one “needs” a Lamborghini Gallardo or a Jackson Pollock original or a bottle of Chateau Lafitte Rothschild 1945 either. An iPhone is expensive, but no one can convincingly argue that it can be considered a luxury item for most people at this point. If smartwatches were ever to totally supplant traditional mechanical watches, I believe it would be a sign of something much more momentous: a large-scale abandonment of the luxurious and the artisanal in favor of the mass-market and the utilitarian. And somehow that is difficult to imagine.

 

31 Responses to “The Apple Watch: What Does It Mean For the Swiss Watch Industry?”

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  1. I don’t think that the examples with Ferrari o Lamborghini are so good in this case. Apple Watch also could be very expensive, so the same person that should buy the expensive watch to show his status would buy the Apple Watch Edition. Even better: with Apple Edition you could show that you are really wealthy person, because you should buy the new one every model upgrade.

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  2. Those manufacturers who believe that they can maintain the status quo, have already lost.
    The smart watch is the future.
    Maybe we will see a combination of smart watch technology and mechanical watch, where the mechanical watch will generate the power required by the smart watch. But to say that the future generation still would prefer to wear a watch, artistically created with gold and diamonds, that only tells the time is stupid.
    If only we could see into the R&D departments of the multi billion dollar watch industry…

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  3. omegatalon

    Why would you want something your iPhone or iPad could be made to do as well as the fact that this is a technology device which means it can break for some reason beyond your control and have a piece of junk as it cannot be repaired, just replaced as this is what consumers of technology watches do not understand as a non-technology watch made a hundred years ago can be serviced today and is essentially timeless as this is just a piece of silicon and worthless as it will break.

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  4. Steve Virata

    This will probably define the smart watch industry to come, and it really could hurt the Swiss watch industry. This isn’t about those of us WIS collectors with Rolexes and APs in our collection, this is about capturing the next generation of consumers. Take how many kids will will have an apple watch and compare this to how many will have a nice mechanical watch. I’m guessing the smartwatches will be the vast majority. And these are the future potential buyers of smart watches or luxury watches. They say that smartwatches will be obsolete in 3-4 years but they don’t mention that there is also a not-so-cheap thing called movement maintenance every 5 or so years which can cost the same as 2-5 smartwatches. And just because there are smartwatch hardware limitations now doesn’t mean they’ll always exist. Look at the limitations of the early iphone and look at it now. I will always have and cherish my mechanical watches, but I may be a part of a shrinking minority.

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    • Bruce Lowell Burke

      I read a lot of comments but yours really hits home. I’ve been in the watch industry since 1989 and if you look at Linkedin (BRUCE LOWELL BURKE) you will see who I am. Now an independent watch consultant, I stay on top of all innovations and plans from most of the manufacturers. When I speak to members of the financial community, I relate to growth plans for the major brands. You are right–there is a major paradigm shift; alas a new breed of buyer! What we have is a different set of parameters acting as the reason to buy a watch. There is a growth with a different kind of consumer emerging in a lot of cases; not interested in the history of Patek but more techy and into the “Apple cult” etc. I always felt that what watch you wear defines in many ways–who you are. Maybe “who you are” is conceptually changing.

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  5. srhardy

    The swiss watch industry is under attack on 2 fronts, one tech like apple are late to the party too and asian super clones knockoffs. The asian attack will result in new brands that will strike market fear in the swiss and on the other hands the tech attack is also really asian too (apple is made in asia)

    Given the HIGH swiss frank and 18th century tech, combined with HIGH wages and costs ~ its all bad and with TAG, OMEGA, ROLEX doubling in price over the last few years to soak up Asian $$$ its short term gain for long term pain.

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  6. daPhantom

    What does not make sense…. If they can integrate their so called smart features into the size of a watch, why not add those features to their phone/s and leave the watch market alone. They may be able to compete on functionality but they are never likely to on appearance and fashion.

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  7. Dodgy Ticker

    What the Smartwatch really is, is a remote screen for your iPhone. Not discounting the product which is interesting, but it isn’t really bringing a lot to the party other than the size – and you still need that phone in your pocket.
    As it is synchronized with your iPhone, I would need to know how much functionality is left in the watch if the phone battery dies or you lose/forget the phone or have it stolen? Once the hype dies down a little I am hoping someone will give us some real-world tests.
    $350? Yes it will sell well at that but I expect the Swiss will be around a while longer too

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  8. Randy Rogers

    Having the benefit of being a 2nd generation Watch Industry guy, there are outside factors affecting ‘desire’ and ‘choice’, that being the socio-economic argument. Millenials neither have the desire for what was the Father’s or Grandfathers, Mothers etc. Timepiece. With a 8 year recession ongoing, a 30 Hour Workweek, Medical Care as a mandatory cost to life in America, no one has had an issue affording the latest and greatest in Phones, with the Apple and Samsung, the poorest among us, can scrape together the $395 Watch with multi-features, and have the latest and greatest, and not trapped in distribution arguments. mired behind ego pricing. TAG-Heuer has become stale and their fathers Watch, Tudor has failed to capture + Dollars for Rolex, and found itself in the same doors dominating that Retailers OTB, rather than claiming there own real estate! As another has written, the low end, sub $1500 will suffer, the Branded Timepiece will survive based on ‘pride of ownership’, Design, Quality as a Heritage, but all brands must re-define the ‘Who, What, Why and How. Apple will sell in millions of Units @$395.

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  9. Are these perpetual watches, with automatic time changes, alarms, leap years, etc.?

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  10. It won’t impact high end watches right now, with future customers maybe. But low end swiss watches will loose out on at least a billion dollars of business and with every year the apple watch and android watches get better and more players come into the “smart watch” segment they will loose out more. I think apple was smart in making 2 sizes and making them in different metals with different finishes. No one needs a Lamborghini but it at least is faster than a chevy volt or nissan leaf, a quartz/mechanical watch offers no advantage over a smart watch.

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    • I disagree. While I don’t know much about watches, I do know about Apple products and their inability to remain functional 3 to 4 years post purchase. A $400 quartz/mechanical watch will last decades; how long do you think an apple watch will last before it becomes obsolete?

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    • daPhantom

      “a quartz/mechanical watch offers no advantage over a smart watch” ??

      Totally disagree….. A quartz or Mechanical watch look so much better and offer the wearer a degree of class that a smartwatch never will – There is simply no comparison. Designers of so called smartwatches are never going to be able to produce many various models each to compete with the mainstream industry. Perhaps someone may swap their Timex for one, but a Patek wearer is NEVER going to wear a Samsung or Apple/ Orange or whatever.

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  11. James Smith-Reynolds

    A luxury mechanical watch is one of the ultimate status symbols for the alpha male (along with luxury cars etc.) and as a consequence many will be reluctant to swap such an item over for a digital smart watch that has no longevity.

    Apple can only survive by making its products obsolete (like the shark that has to continually swim to survive) and the life span of their products is becoming shorter and shorter.

    I have owned countless Apple products in the last couple of decades but even I, in the last few years, have grown weary of their childish ‘right-on’ marketing and the inescapable feeling they are continually rifling about in my wallet.

    People love mechanical watches because they ‘transcend’ time – being from another era – and link one generation to another. Apple’s products are the reverse and have come to symbolise the transient, selfish, shallow nature of the ‘me generation’ and contemporary culture more than anything else I can think of.

    Long live the mechanical time piece!

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    • Watchfreak

      Absolutely agree on your comment James!

      Having said that, Apple will sell in the billions! Apple Watch v2, 3, 4 etc will continue to plaster mainstream techies over the next years and will find a niche among young consumers… However the true connoisseur will probably steer clear of these timepieces…..They will not transcend time the way I cherish my grandfather’s Rolex Datejust from 1958 bought in Havana….

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  12. I am a huge Swiss Watch Fan and a huge iPhone Fan. I will be buying an Apple Watch and will be putting it into my rotation with the rest of my Swiss Mechanical and Japanese Quartz watches. I don’t see it as a replacement of any of my watches but more of a compliment to what I own currently. I honestly think the Apple Watch is a fad and will not stand the test of time as Swiss Mechanical watches but, it does not mean it should be ignored.

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  13. Robert Follis

    I beg to differ, I find now that high-end Swiss watches are so boring, derivative and self referencing that I no longer find pleasure in wearing my Pateks, Audemars and Rolex, they are all up for sale. As a daily watch a Seiko 5 takes a lot of beating. The Apple Watch will become so useful to users that ‘real’ watches will come out every now and then as a treat, but every time they do, users will the miss the AW functions and eventually the non smart watches will be forever gathering dust. I also guarantee that an Apple Watch on your wrist will attract far more attention and admiring glances than the current crop of ugly Swiss behemoths and of course even if you buy a new $400 Apple Watch annually you will still be $1000s in credit even against a mediocre branded ETA reseller. I was going to leave my 6 year old son my red Submariner Date, but in 10 years or so I doubt he will want it. Good luck Switzerland

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    • Why would you believe that “an Apple Watch on your wrist will attract far more attention and admiring glances than the current crop of ugly Swiss behemoths…” if smart watches become as ubiquitous as you presume?

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  14. I think it will be become very painful for traditional watches in the below $1000 segment, esp. for the quartz watches. Why buy a quartz Tissot, Longines, Seiko, etc when you can have this?
    I love traditional watches, but after watching the Keynote presentation, they suddenly seem a bit “old”.

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    • Because those watches you mentioned won’t become obsolete after three years. It seems many people commenting on this forum assume watch wearers wear the watch to tell time, which would make sense despite being incorrect. Smart phones have turned watches into jewelry. Personally, I enjoy the fact that there aren’t many people wearing the same watch as me, and the likelihood of running into someone even less so. Taking the position that smart phones will eliminate the desire for quartz watches also requires one to believe that “watches as jewelry” will cease to exist.

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  15. I think there are two different target audiences for mechanical watches and the Apple watch. Mechanical watches may become cheaper in order to retain sales, but who needs an Apple watch when you have an iPhone? Some people are not wearing watches now because they use their mobiles to find out what time it is. I think the Apple watch will be a passing fad.

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    • daPhantom

      It seems quite ironic that man or woman graduated from having a Pocket watch for time telling to wearing a very nice wristwatch, to not only tell the time, but also be seen as a nice piece of jewellery to which they can be proud to wear. So Using an iPhone instead of a wrist watch seems somewhat of a retrograde step and more primirive than a sporting a Pocket watch.

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  16. Hello,
    I had an Apple //c and the most of Apple Macintosh …
    I have now and new Mac Pro …
    I had all iPhones and the most iPads …
    But I never change my Jaeger LeCultre with any of smart or Apple Watch !!!

    My JLC MasterCompressor 1000M Chrono will be all ways primary Watch !!!

    Thank you,
    Stefanos.

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  17. No threat to the Swiss Watch Industry!
    A passing fad once again!
    Total waste of time!! (pardon the pun)

    MrTissot

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  18. I’ve got a pretty new Rolex Submariner Date on my wrist right now, and previously had an Omega Seamaster PO Chrono. I thought the Sub would be the last watch I’d ever buy, but the convenience and functionality of the Apple Watch (even in this first generation) is undeniable. Maybe I’ll have to start wearing two watches at once?

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  19. “An iPhone is expensive, but no one can convincingly argue that it can be considered a luxury item at this point.”

    You could if you were poor and lived in the ‘third world’

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  20. what are the specs? is it waterproof and shatter proof ? or do you have to buy a silicone wrap like for all other apple products? how will that look then?

    Reply
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