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Apple pick-pocket Watch – the real 'game'

BaselWorld, the world’s largest watch fair, opens today and in a few weeks time the Apple Watch will hit stores. Should the Swiss watch industry be worried? COLEBY NICHOLSON believes the real “game” has nothing to do with watches it’s all about picking your pocket.

I am not sure if the Apple Watch is one of the most anticipated products for the last 10 years or if no one really cares. It has certainly caused endless speculation and gossip. I first added to the commentary in December 2011 when I asked the watch and jewellery industry, “Will Apple launch an iWatch?

So now, two and half years later, the Apple Watch is here. Depending on which side of the fence you sit, we are about to see the greatest shakeup of the industry since the Japanese “stole” the watch industry from the Swiss in the 1970s - only to find that the Swiss fought back with the Swatch Watch in the 1980s - or it will be rather ho-hum.

Ever since those two upheavals, the international watch market has been, pretty much, a cosy gentlemen’s club, with very little disruption however, fast-forward three decades and depending on what you read, the Swiss and Japanese watchmakers are either worried about the Apple Watch or they don’t give a damn.

The Apple Watch will be released in Australia on April 24
The Apple Watch will be released in Australia on April 24

It’s all very confusing and regardless, I firmly believe the watch industry, and many others, are missing the point; Apple is not selling a watch.

Of course most of the industry debate and conjecture has surrounded the form and function of Apple’s design and whether this watch will capture the hearts and minds of consumers as the company’s other products have done so many times before.

If Apple achieves that, its watch will be considered a success but it’s certainly not a fait accompli. People easily forget Apple’s failures, of which there have been many.

That aside, and again depending on to whom you listen, the new Apple Watch is either a stroke of genius or a complete waste of time! (No pun intended!)

Most of the tech world is asking why anyone needs a watch, while the Apple fanboys - the true believers in everything Apple – will surely create enormous buzz when the device is finally released on April 10.

Pundits have suggested that the Apple Watch might even have affected last Christmas’ sales of rival watch brands because buyers were waiting to see this enormously hyped product. Incredibly some Australian state police have warned about the Apple Watch distracting drivers suggesting that they could be fined for using it.

All this about a product that has yet to be released!

So one wonders what the goss’ will be at BaselWorld this week, where 100,000 people descend on the small Swiss city to see the latest and greatest new watch products. Well, traditional watches that is.

Debate about Apple’s new – and yet to be released – products is not new, after all the company didn’t invent computers, music players, phones or computer tablets, but each time it released products into these categories Apple changed the world!

So why not a watch, right? But again, maybe everyone is missing the point.

Swatch and Fossil

For about 12 months the business world has been trying to establish whether the Apple Watch is a watch at all. And if so, will it be positioned as a competitor to the traditional watchmakers like the Swatch and Fossil groups?

There is no doubt that at least some models from both groups are susceptible.

Swatch Group’s Tissot is one of the brands that may be under threat from the Apple Watch, due to its price range
Swatch Group’s Tissot is one of the brands that may be under threat from the Apple Watch, due to its price range

Industry experts and financial analysts have already singled out Swatch Group’s Tissot as one brand that might be affected by the Apple Watch selling in the $500 to $1,500 price range.

Some 20 per cent of Swatch’s sales are reported to come from its low and mid-priced ranges and, whether a coincidence or not, Swatch’s shares traded 2.5 per cent lower on the Zurich exchange after Apple announced its plans last year.

At one point, Swatch’s shares had already lost nearly 18 per cent of their value, which some financial analyst’s attributed to Apple’s entry into the watch market.

Many of Fossil’s watch brands might be harmed, the experts say. I seriously doubt, however, that an Apple device will affect the sales of high-end luxury brands because those watches aren’t purchased as timepieces.

I also very much doubt that anyone who might be considering buying or, as the Swiss would say “investing”, in a $5,000, $10,000 or $20,000 heritage brand would choose the Apple model instead; however there can be no doubt that the Apple Watch will not only steal sales from some traditional brands but also reinvigorate the wider watch market by introducing a new generation to traditional timepieces and to wearing something on their wrists.

Still, in my mind, the debate is missing the point. Not only is the Apple Watch not a watch, and therefore not meant to compete with traditional watches, Apple’s ultimate objective is surely not about selling timepieces.

Do you really think Apple needs revenue from “watch” sales?

I mean, the company is reported to have as much as US$178 billion (yes billion with a “B”) in cash sitting in the bank? Therefore, do you think Apple really set out on this path to sell more watches than the Swiss, or the Japanese for that matter?

Personally I don’t think so.

You see this has nothing to do with timepieces at all. And that’s the thing that has been lost on most of the business commentary surrounding Apple’s, so-called, watch.

Apple is not, and will not, be in the watch business!

Not even a smartwatch

Indeed, I wonder whether Apple is even in the smartwatch business, like Casio, Sony, LG, Motorola, Pebble and many others.

You see, maybe there are now three categories of “watches”; the traditional market dominated by the Swiss and Japanese, early smartwatches like Casio, Sony, and Motorola and now a new category perhaps more aptly described as wrist media.

Unlike Apple, Tag Heuer’s business model stops after the first purchase
Unlike Apple, Tag Heuer’s business model stops after the first purchase

Think about it; the business model of traditional watch companies is to sell a watch, get paid and hope the customer returns to buy another watch at some point in the future. The same goes for the likes of the smartwatch category, but Apple doesn’t play that game.

That’s a traditional business model; sell a product and earn more revenue only when the customer buys a second product. However, the iPod, iPhone and the iPad all generate income for Apple long after the initial sale of the product.

While traditional watch manufacturers have only one income source – the sale of the watch – the Apple Watch (and the Google watch) are focused on driving future income streams, directly from that product.

That is, Rolex, Tag Heuer, Omega and all the other upmarket brands hope you buy more than one watch but at the end of the day the income stream stops after the purchase.

Likewise, the new smartwatches like Casio and Sony operate in much the same way as the traditional watch market does; sell a watch and hope the customer buys another watch sometime in the future.

However, the new devices from Apple and Google will act as gateways to the consumer’s wallet and what better way to unlock their wallet than to literally strap the “gate” directly to the consumer's wrist so that the income stream keeps flowing towards Apple and Google long after the initial purchase of the product.

Background reading: Google watch a game changer?

We can debate whether the Apple and Google devices are aesthetically pleasing and whether the designs and functions are innovative; we can argue whether they should be called watches at all and who might and might not buy them; we can all agree that most luxury watches these days are bought as jewellery and status symbols – we can discuss all these things and much more but we’re missing the main game in doing so.

Pick-Pocket Watch

Seeing Apple in the watch market is an analogue view of business but we’re in the digital age and we now have a new market, one that is simultaneously shaking up one industry (traditional watchmaking) by creating an, as yet, unnamed, new industry.

The Google watch is about keeping the consumer connected to the brand
The Google watch is about keeping the consumer connected to the brand

It’s another play between them and the third technology giant – Facebook. It’s a much bigger game about something else entirely.

Consider this: Google knows what you’re searching for, Facebook knows what you like, and Apple (and Amazon) knows what you’re buying. And they all know where you are almost all of the day; a “watch” is the last thing on the minds of these companies!

No, Apple and Google aren’t competing against the Swiss and Japanese and nor do they need revenue from selling you a watch; but they do want to own your wrist to gain access to your wallet every hour of every day, long after you made that original purchase.

In affect, they want to “pick your pocket” or, at least, your wallet, and they now have the technology to do that. What’s more, you will be happily assisting them by strapping the device to your wrist.

As smart as the Swiss are, even they can’t do that because they're watchmakers and Apple and Google aren’t!

For the techno “watch companies” it’s all about a new market; accessing the wallets of the connected consumer; it has nothing to do with knowing the time of day, heart monitoring and email alerts, these new wrist media devices are all about taking a minuscule cut - or clipping the ticket, as they say – on every purchase you make.

Will the real "game" ultimately prove successful? Who knows!

However, after all of the debate and prognostication, men and women will continue to buy traditional watches as items of jewellery and adornment and as a way to display their style and status, as they always have.

The Swiss, and others, have that market well and truly wrapped-up and, as much as they try, even the mighty Apple and Google can't demolish that business model! (Well not right now).

I think jewellery retailers should welcome the Apple Watch because the traditional market will eventually benefit from a new generation of watch connoisseurs.

More reading
Will Apple launch an iWatch?
Google watch a game changer
Google confirms entry into watch market

Swatch confident against smartwatch wave
Consumer interest grows for smartwatch, smart jewellery
Smart shopping: change or disappear
Is Apple iWatch closer than we think?
Casio to release smartwatch


Coleby Nicholson

Former Publisher • Jeweller Magazine

Coleby Nicholson launched Jeweller in 1996 and was also publisher and managing editor from 2006 to 2019. He has covered the jewellery industry for more than 20 years and specialises in business-to-business aspects of the industry.

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