The last few years
have seen a significant rise in wearable technology with the smartwatch
capturing most attention.
In particular, the Apple Watch grabbed headlines across the world, reportedly flying off the shelves or
languishing on them depending which media you choose to believe. Nevertheless,
the commitment from Cupertino to the idea has hastened the inevitable flood of
competitors, with Motorola’s Moto 360 leading the charge for the Android camp.
But what has been the
repercussion on the real (or dumb) watch market? And where might it lead?
Last year, Reuters
reported steep
falls in Swiss watch exports to the Asian market, with third-quarter sales significantly
below expectations. In some regions, year-on-year declines were double to
triple the analysts’ predictions. A Deloitte
report reflects this, showing clear pessimism for the China and Hong Kong
markets, where the report also highlights that acceptance for smartwatches is
much higher.
While the Reuters
report showed timepieces in all price segments were impacted, it was watches in
the low to mid-segment that were most affected, with the 200-500 franc category
slipping 14.5%. Not coincidentally, this is the price point of most current
smart watches… And in worse news for the traditional watch industry, market researcher Gartner
predicts smartwatch sales will shoot up from 30 million in 2015 in to 50
million this year – and then to 66.7 million in 2017.
However, I would
hesitate to say that this is a straight cannibalisation of sales. Perhaps people
are just not buying watches as much? Or perhaps the wearables are a whole new
market?
In fact, in a
Mintel report from 2010 of more than 1,500 UK people, 14% said they
had no need for a watch with the percentage doubling among 15 to 24-year-olds.
I would suggest that it is this audience who would prefer to spend their money
on a device that becomes a seamless part of their mobile, entertainment,
communication landscape. The fact it tells the time too is academic.
So, will my beloved
Seamaster and Omega watch
winder find themselves on the scrapheap of history?
Not so fast! According
to the industry, higher-end watches are remaining more buoyant. However, consumers
are consolidating their collections, opting to invest in one single all-rounder
watch rather than owning a range for different occasions. Meanwhile the rising
price of metals, and especially gold, has pushed up the cost per unit, which
may discourage purchasing but can actually help maintain some growth in the
market overall.
And the luxury market
is also paying attention to the smartwatch opportunity, showing some acceptance
of the technology – or perhaps the attraction to a purchasing cycle where technology
is considerably more disposable than a treasured family Rolex. While Apple has
tried to court the big-ticket spenders of the watch market with its $10,000 gold
Watch Editions, Tag Heuer has launched the most expensive smartwatch that
doesn’t look like a toy: the Connected watch, running on Android.
It will be interesting
to see how this plays out – and I’m reminded of the history
of digital watches in the 80s, as they moved from high-tech luxury to cheap
child’s plaything.
While I suspect the
luxury market will move away from its dalliances with tech and focus on a core
market of passionate watch owners who seek status as much as a timepiece, the
middle market will be the space where the smartphone will rule.
However, in doing so, it might just also create the next generation of real
watch owners who, now accustomed to wearing something on their wrist, want to
graduate from a gadget that needs regular upgrading to jewellery that could
last a lifetime.
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