New Rolex Models at Baselworld 2018
Over the last couple of years, there have been many discussions about the rise of smartwatches and the effect they would have on the classic watch industry. Discussion topics range from smartwatches replacing the mechanical watch to them creating new potential classic watch buyers by introducing them to the topic of wristwatches and later converting them to the luxury market. There is no scenario that has not been discussed by both journalists and watch aficionados alike. Two years after the introduction of the Apple Watch, it’s safe to say that smart watches and mechanical watches can co-exist for now. And is anyone winning? Not really…
To start, it’s interesting to look at what the development of smartwatches is based on. To understand the essence of their development is to understand the challenges brands face in appealing to consumers. The biggest challenge the watch industry faces going forward is its conservative and slow-paced character. This is caused by fast-developing tech companies that move at a significantly quicker pace in both production and getting their message across to consumers. It’s a challenge that traditional watch brands need to address by changing their business as necessary if they feel the smartwatch market is something they want to be part of.
Zooming in on the topic at hand, the first point of discussion is based on the product characteristics. Is a smartwatch comparable to a mechanical watch, or is it an entirely different product? This would then decide whether smartwatches could be a feasible replacement for a traditional watch. It is safe to say that, for purely timekeeping purposes, smartwatches are not a replacement for the traditional luxury watch. This is because people aren’t buying smartwatches to tell the time. It’s more interesting to look at the entry point for different brands and the challenges they face convincing consumers their (smart)watch is the right product for them to buy instead of buying an Apple Watch.
In terms of smartwatches, we will focus on the Apple Watch, as this is the biggest competitor for traditional watch brands. Apple also compares their sales numbers to Rolex and Omega in order to project the image of having a big impact on the watch industry. Although it does show the commercial success Apple has had with the Apple Watch, it does not mean Apple is now a luxury watch brand or elicits the same emotion as traditional watch brands. Sure, the commercial impact will be felt by traditional watch brands, as there are consumers that will buy a smart watch instead of a mechanical watch. However, a consumer’s choice to buy a €400 Apple Watch over a €10,000 Rolex does not originate from the same consumer motivation and, therefore, adds nuance to the overall discussion.
The key factor to Apple’s big success is the fact that they have made technology ‘sexy’. By using attractive aesthetics to appeal to people, the company has successfully added emotion to a functional product that, in essence, has no emotional value. In order to be successful, Apple would have to make a functional watch radiate the same brand appeal as all their other products. Why this functional approach? Apple is, at its core, a tech brand and not a watch brand and, therefore, will not necessarily appeal to traditional watch consumers. People are drawn to smartwatches because of the diversity of smart functions they offer. If brands are able to connect with consumers on an emotional level like Apple, they will have created a relevant product.
On the other side, there are the traditional watch brands that have broadened their horizons by introducing smartwatches. The key factor to success for them is winning over traditional watch consumers that chose a watch because of its high-quality craftsmanship, heritage, and overall aesthetics. In order to connect to them, they have to convince consumers that a traditional watch company can also develop a modern technological product built on the same trust and emotion as their mechanical watches. So it has less to do with building an emotion around watches and more to do with securing trust in the quality and logic of offering smart functions on a watch.
Both industries have used help of people ‘from the other side’ to increase their chances of success. Apple has used the knowledge gathered by world-renowned designer Marc Newson while working for Ikepod and Jaeger-LeCoultre. Almost all the traditional watch brands that have developed a smartwatch, such as Alpina, Fréderique Constant, Montblanc, and TAG Heuer, have used tech companies, mostly based in California, to help them with the ‘smart’ part of their watches. It’s a completely logical step because it will allow them not to have to invest in developing in-house knowledge that is not their core business to start with.
So what smartwatches from traditional watch brands are people talking about? Two watches that have created quite a bit of buzz are the TAG Heuer Connected and its recently introduced follow-up, the Tag Heuer Connected Modular 45. The Tag Heuer Connected Modular 45 is available for around €1,600 and has almost all the features of a smartwatch that runs on the Android Wear platform. This watch is considered a premium swartwatch by the people that have experienced it. This down to the design based on the popular Carrera series and the materials used that give it the exclusive TAG Heuer feel and credibility.
Another smartwatch that has been built on the Android Wear platform is the Montblanc Summit series. The Richemont Group has designated Montblanc as their brand for exploring the smartwatch market. Choosing Montblanc has allowed Richemont to bring luxury watches for a reasonable price to a wider audience. The Montblanc 1858-inspired dials and case characterize the design of the Summit series and give it a retro feel despite its tech-based functionalities. The price of the Summit starts at a little over €800, making it a lower entry point for people that are looking for a premium smartwatch.
A brand that has a different view of how to integrate smartwatch functionalities in a classic watch is Frédérique Constant. The first step that Frédérique Constant made in adding smart technology to their brand is the Horological Smartwatch. What sets these watches apart from TAG Heuer and Montblanc watches is the fact that Frédérique Constant has not built a modern smartwatch with a touchscreen. Instead, it went with a classic looking watch that has built-in smartwatch functionalities and can be communicated with using an app. It’s a different approach that ensures that you will always have that well-known classic feel of a watch instead of the feeling of buying a tech product from a classic watch brand.
The approach Frédérique Constant has chosen might just be the better approach. The brand stays very close to what you would expect from a classic watch brand, thus better meeting the expectations of classic watch consumers when diving into the world of smartwatches. In addition, the brand is staying away from the discussion of how quickly the market should develop touchscreens and user interfaces and what a luxury digital smartwatch should look like. It might be the road to success, but who knows… If smartwatches from classic watch brands will be successful remains to be seen.
On the other hand, what we see from consumers is that the love for mechanical watches is very much alive. We haven’t focused on the current market for mechanical watches in this article, but there is still a large demand for these watches. In a global economy, there are parts of the world with growing wealth and a growing demand for luxury products. The watch industry profits greatly from this such demand. That doesn’t mean that the latest developments do not affect the industry as a whole. On the contrary, the watch industry needs to focus on staying relevant by innovating, focusing on consumer demands, optimising production, and connecting to consumers by coming up with sensational stories that define why the industry is still relevant.
The year 2017 has once again seen some great watch stories that have been built on the strong heritage and emotion that defines the industry. Think of the 60th anniversary of the Omega Speedmaster, Railmaster, and Seamaster with the introduction of the immensely popular Omega 1957 Trilogy Limited Editions. Or the re-introduction of the classic Rolex Sea Dweller – a watch that has been the epitome of Rolex diving watches for the last 50 years – updated to modern standards. And last but not least, the immensely widely covered auction of the Rolex Daytona Paul Newman that had been owned by the actor himself and sold for $17.8 million dollars. These are the kinds of stories that create the magic people are drawn to. Let’s hope the watch industry is able to capture them.
In the end, for consumers it’s all about the connection to the watch and the brand and not about winning or replacing. That’s just what media and the producers want you to think. For now, the emotional versus functional approach of both industries is still worlds apart. However, look at it this way: the traditional watch industry was the first to actually introduce the main feature that Apple products have become world famous for, namely attaching emotion to technology. I guess the worlds aren’t that far apart after all. It will be exciting to see where capturing the human emotion will take us. For now, it’s interesting how brands in both categories are challenged to think about their future and how to go forward. What will the outcome be? Only time will tell…
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