Here Comes Apple's Watch. Should Watchmakers Be Worried?

September 12, 2014

There’s a kind of man who calls a watch a timepiece. He can tell an Audemars Piguet from a Vacheron Constantin (CFR:VX) at 50 paces. This is the kind of guy—and it usually is a guy—who doesn’t worry about battery life or even accuracy, at least when it comes to the device strapped to his wrist. And he probably won’t change his ways now that Apple (AAPL) Chief Executive Officer Tim Cook has finally shown the world what’s up his sleeve.

On Sept. 9, Apple unveiled its long-awaited Apple Watch. Unlike Samsung (005930:KS), which has pitched its watch as “wearable technology,” Apple is embracing watch-y-ness. There are 3 collections, 2 sizes, and 6 straps, for a total of 34 styles, unusual for a company not known for variety and choice. At the high end, the Apple Watch comes in a solid (yes, not plated) 18-karat yellow or rose gold case.

It’s also undeniably a gadget, giving wearers access to iPhone apps and other features without forcing them to reach into a pocket or bag. When released next year, the watch will be able to count your steps, remind you where you’ve parked your BMW, and perhaps pay your tab at Le Bernardin. And, of course, Siri is at your service.

No doubt, the Apple Watch will keep really good time—the folks in Cupertino, Calif., boast that it’s accurate to within 50 milliseconds. But that isn’t likely to keep the makers of high-end timepieces in Switzerland up at night.

Time-telling smartphones are everywhere, yet since 2000, Swiss watchmakers have more than doubled exports, valued at more than 20 billion Swiss francs ($21.3 billion) in 2013. “When mobile phones and devices came on the market, we were asked about their impact on our industry,” says Swatch Group (UHR:SW) CEO Nick Hayek. “Media were already anticipating the end of watches; however, it was just the contrary.”

While Swatch Group owns the ultraluxury watchmaker Breguet—a Classique Tourbillon Extra Plat will set you back more than $150,000—some of its less prestigious brands could lose customers to Apple. Tissot and Rado emphasize new technologies such as solar charging and touch responsiveness; they also have prices that are likely to overlap with some of the Apple Watch models. Swatch is rumored to be developing its own smartwatch.

(Bloomberg Businessweek)



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