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Is the Apple Watch a disruptive innovation?

Robert-Jan Broer
Mar 18, 2015
Apple Watch Edition
Apple Watch Edition, Image: Apple

Will Apple’s latest innovation, their smartwatch – or plain ‘Watch’, as they like to call it – disrupt the existing watch market? It is likely to do just that, especially if you take into account that most watches sold are simple quartz watches that have a small price tag.

Will it disrupt the luxury watch market, as so many non-watch journalists – and Apple themselves – like to think? Hardly. In this article, we will explain why we think it won’t affect the luxury market for (mechanical) watches.

 

The often-referred Quartz crisis

Omega Speedmaster Chronograph Moonwatch
Omega SpeedmasterImage: Auctionata

 

Non-watch journalists like to remind us of the quartz crisis that occurred about four decades ago. As soon as manufacturers were able to use cheap quartz battery-operated movements to create very accurate timekeepers, a lot of people didn’t have any reason to buy a mechanical watch anymore. True disruptive innovation. But keep in mind that this was in a different time. Before, people had no choice other than to wear mechanical watches; they bought them for practical reasons. You need to be able to tell the time, right? Also, a lot of the mechanical watches did not carry significant brand names on the dial, although we’d like to think that everyone was wearing an Omega, Rolex, or Patek Philippe. This wasn’t the case, of course. Every department store had its line-up of ‘white label’ mechanical watches.

In the 1990s, when mechanical watches became ‘hot’ again, they were still subject to less accurate timekeeping than cheap quartz watches. People started to buy mechanical watches for different reasons. As a little piece of micro engineering on the wrist or a piece of jewelry, one of the very few a gentleman can actually wear. It reflects his personality and communicates a sense for style and craftsmanship. These are good reasons to buy something special, even if you no longer need it to perform unique functions. It is more comparable to buying a classic car like a MGB or old Porsche 911 next to your daily driver. Something you can loose yourself in, clear your mind, be passionate about.

IWC Schaffhausen Portugieser Chronograph Ref. 3714
IWC Schaffhausen Portugieser Chronograph Ref. 3714,Image: Auctionata

 

In that regard, the Apple Watch or any of its smartwatch competitors are hardly as disruptive to the existing watch industry as the quartz watches were in the 1970s. People buy luxury watches for different reasons, one of the most important being that it is a luxury product. Most collectors and enthusiasts, moreover, admire the mechanical movement of the watch and that it’s (partially) made by hand, not by robots. Some connoisseurs often lament that a non-mechanical watch simply lacks ‘soul’. Perhaps we can even make it simpler to you: A Rolex or IWC watch is hardly bought so the wearer can properly read the time.

 

Who is buying the Apple Watch?

So, who is the target audience for the Apple Watch if it isn’t the guy or girl who now proudly wears a Tissot or Longines on the wrist? Before we answer this question, we also like to take the time to explain to you what the Apple Watch exactly is.

 

Apple Watch Sport
Apple Watch SportImage: Apple Inc.

 

The Apple Watch is – despite the name – a notifier, client, or satellite device for your iPhone. The Apple Watch connects to your phone in order to notify you about new e-mails, new messages on your social media channels, submitting information from its sensors to a health-app on the iPhone, and so on. One of the first 3rd party apps is developed by BMW for their i3 Series car. So the Apple Watch is an extension for your iPhone. Oh, it also tells time, but that’s more or less collateral damage.

So, who is buying the Apple Watch? Well, rest assured that Apple will sell an awful lot of these devices worldwide. Our best guess about the clientele for this watch is that mainly people who DO NOT own or wear a watch at the moment will buy it. People who love to adopt new technology, who think a regular wristwatch is something their father or grandfather used to wear to tell time. Today, you don’t need a watch, you can read the time almost anywhere. You have your iPhone, iPad, laptop, a colleague with a watch, a clock at the station, and so on.

 

Apple Watch models
Apple Watch modelsImage: Apple Inc.

The people who will buy the Apple Watch have found – thanks to Apple – a new reason to wear something on their wrist. Being able to monitor your health status, have all social media literally at hand, etc. How long they will enjoy this is another question, as they still will need to get their iPhone out of their pocket to have the full functionality they’ve become accustomed to. Although you can receive and send e-mails on your iPhone, don’t you rather use a laptop with a traditional keyboard to write a lengthy answer to someone?

 

Will it be successful?

Heck, it surely will! Besides those who love to have every new Apple gadget (the author of this piece also belongs to that category), it will address a lot of young people as described above, those who didn’t have a real reason to wear a watch on their wrists until now.

 

Apple Watch Sport Aluminium
Apple Watch Sport AluminiumImage: Apple Inc.

 

As a side note: We do wonder whether the technology will be mature enough for daily use and wear. A battery life of just 18 hours – and keep in mind this is a specification on paper, like your iPhone, which probably needs to be additionally charged at least one time per day – and technology that might be old as soon as it will turn Summer 2015. Remember, you are still buying technology. It won’t last forever, to say the least.

Although we are aware of the fact that it is Apple, which has a strong group of followers, think about how many other smartwatches you’ve already seen. Samsung, Pebble, and a couple of others already produced and delivered smartwatches on the market, but you rarely come across one of those. Let’s hope for Apple that it will have a stronger presence.

 

Is the luxury watch industry in danger?

Although we are the last ones to say that the level of arrogance by many (Swiss) luxury watch brands is (beyond) astonishing at times, we think they have little to fear from new technology this time. As we already explained in the first paragraphs of this article, a luxury mechanical timepiece is bought for different reasons. We are convinced that people who now own a nice Jaeger-LeCoultre or IWC might buy an Apple Watch as they are interested in these new functionalities and purposes, but it will not replace the high-end luxury watch they bought on more emotional grounds.

 

Rolex Submariner
Rolex SubmarinerImage: Bexsonn

 

However, you probably also already noticed that some of the Swiss watch brands are reacting a bit nervous to the Apple Watch. They don’t feel as confident as we do, it seems. They decided to respond to the Apple Watch with funny counter advertisements, making fun of the ’18 hour’ power reserve and so on. As soon as they did so, they started to make a comparison between their own watch and the Apple Watch. Which does not make sense.

Another response from some brands is their own smartwatch. Frederique Constant, for example, decided to come up with a good-looking wristwatch with a bit of smartwatch functionality. However, by making a smartwatch as a non-technology company, you are on dangerous turf. Apple, likely one of the most powerful companies in the world right now, is probably a few sizes too big for any of the Swiss luxury watchmakers. It is daring to step forward into the arena of smartwatches, but you are not going to beat Apple on their turf. Try again when Apple will start making a mechanical watch.

The only dedicated watch company that can probably get very far with a smartwatch is Swatch. However, even they probably would need to rely on an existing technology platform. Like Android or iOS. The latter is not going to happen, we safely assume.

 

So, what about opportunities for the luxury watch industry?

So, basically, we can summarize this article in the fact that the Apple Watch and the luxury watch industry are worlds apart. But we also thought a bit about how the conservative luxury watch industry could benefit from the Apple Watch.

 

Breitling Navitimer
Breitling Navitimer

 

We explained that the Apple Watch will probably have a lot of buyers that do not own a watch up till now. Perhaps people in their teens or early twenties, who didn’t find a reason to wear a serious watch. However, one reason might also be that they never were exposed to a fine timepiece. Yet.

The luxury watch brands are still aiming their arrows on the people in their 30s, 40s, 50s, etc. who have a decent job and are willing to spend a few thousand on a mechanical wristwatch. This means they immediately miss out on ‘educating’ a new generation about their heritage, their watches, mechanical engineering, and so on. Addressing those with an Apple Watch on their wrist might be the best way to get attention for real watches. So, instead of using their capacity and marketing brains on coming up with funny advertisements making jokes about an 18 hour ‘power reserve’, it might be wise to come up with something clever to get this new generation interested in their watches for more valid reasons or motives.

Since the Apple Watch luxury edition in gold costs between € 11,000 and € 18,000, here are some of the best alternatives and watch classics:

 

Top 10 watches
Top 10 watchesImage Auctionata

Robert-Jan Broer
By Robert-Jan Broer
Mar 18, 2015
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