Here’s What Traditional Watchmakers Are Saying About the Apple Watch
While Apple revealed some details about its upcoming smartwatch product when it was unveiled at the company’s media event in September, there are still far more questions than answers surrounding the Apple Watch. Although statements made by Apple representatives seem to suggest that the device will need to be charged at least once a day, the precise battery life of the Apple Watch is still unknown. Another big question mark is the price of the Apple Watch. So far, Apple has only revealed that prices will start at $349. However, with a total of thirty-four different versions of the Apple Watch in “three distinctive collections,” it’s not entirely clear what versions will qualify for the $349 price tag.
The price issue is closely tied to one of the biggest unknowns related to the Apple Watch: how will it impact the traditional timepiece industry? There seems to be as many opinions about the impact that the Apple watch will have on the established horology industry as there are versions of the device and the reactions from people involved in the traditional watchmaking industry have ranged from admiration and trepidation, to scorn and hostility. Here’s what five horology industry insiders are saying about the Apple Watch.
Even before the Apple Watch was unveiled, the device was already causing controversy in Switzerland’s prestigious and well-established horology industry, when it emerged that Apple was trying to poach workers from various Swiss watch brands earlier this year. The news of Apple’s recruitment drive sparked a hostile reaction from several industry executives, including Nick Hayek, chief executive of watchmaker giant Swatch.
Hayek seemed to disapprove of Apple’s entry into the watchmaking business and told the Financial Times that Switzerland’s horology industry needed to guard its trade secrets from tech industry newcomers. “We have been in discussions — not ever initiated by us — with practically all players in smart wearables up until today,” Hayek told the Financial Times in March of this year. “However, we see no reason why we should enter into any partnership agreement.”
The rumors of Apple’s attempts to recruit workers from Switzerland’s horology industry were later revealed to be true when Reuters reported that the Cupertino-based company had hired Patrick Pruniaux, former vice president for sales at LVMH watch brand TAG Heuer. The hiring prompted LVMH executive and Hublot brand CEO Jean-Claude Biver to tell Reuters, “I personally believe [the Apple Watch] has the potential to be a threat for the industry, and it should not stay with its arms crossed.”
Other horology industry executives believe that the Apple Watch will only disrupt watchmakers at the lower end of the market. As recently noted by the Financial Times, only 6% of the watches made in Switzerland cost $349 or less. “When you are in the luxury sector, selling mechanical watches, you are not selling timepieces. It is more an emotion, or a lifestyle,” Ulysse Nardin chief executive Patrik Hoffmann told the Financial Times. “I don’t think at all that this will change what we are doing.”
On the other hand, the more expensive versions of the Apple Watch may compete with some mid-range Swiss-made watches. According to jewelers and watch experts consulted by Tech Crunch, the 18-karat gold chassis for the Apple Watch Edition versions costs about $600 to make, not including any electronic components. Retailers cited by Forbes believe the gold Apple Watch Edition could sell for as much as $5,000 to $10,000, while the Apple Watch could sell for around $1,000. Those prices could put some of the Apple Watch Edition and Apple Watch models in direct competition with many similarly priced Swiss-made timepieces. According to the Financial Times, over 65% of the Swiss watch industry’s output consists of watches with a value of over $3,200. Of course, certain high-end watch brands will remain unaffected, even by a $10,000 Apple Watch Edition model. As noted by Forbes, gold Rolex watches start at $35,000 and go up from there.
Other horology industry insiders believe that the limited lifespan of an electronic timepiece will make the Apple Watch less appealing to traditional watch buyers. “If you buy a mechanical watch, the beauty is that it will still work in five years’ time,” TAG Heuer chief executive Stéphane Linder told the Financial Times. “There is no obsolescence. With a smartwatch, that is not necessarily the case.”
However, there is also no guarantee that the Apple Watch will be updated in the same way as Apple’s iPhone. According to unnamed sources cited by Forbes, some industry insiders believe that the Apple Watch will feature a replaceable integrated circuit package that would allow the device to be continuously upgraded with the latest processors, similar to a modular smartphone design.
Finally, at least one horology industry insider believes that the Apple Watch will not compete with traditional watchmakers, but simply spark growth in the burgeoning smartwatch market. “I am sure that these devices represent a new market segment, and that, in the medium term, this segment will have more value than the traditional watch industry,” predicted former Swatch engineer Elmar Mock, according to the Financial Times. “This new segment is a fantastic opportunity.”
While it remains to be seen if the Apple Watch will be a boon or a bane for the traditional watch industry, there is no question that Apple’s entry into the smartwatch market is already changing how some traditional watchmakers think about their products. According to the Financial Times, at least one Swiss watchmaker is already considering making its own smartwatch.
Follow Nathanael on Twitter @ArnoldEtan_WSCS