How Apple Plans to Take On the Luxury Watch Sector

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 Courtesy Apple

After revolutionizing how we listen to music with the iPod and redefining basic human interaction with the iPhone, it was only a matter of time until Apple changed how we think of what it means to actually wear a watch, both in style and function.

“The first Apple Watch is exciting to me because of the potential,” says luxury watch collector Greg Brown. “Apple has a great track record of disrupting industries, and it is short-sighted for the mechanical watch market to think this will only effect the lower-end products.”

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The Apple Watch has been positioned as a jack-of-all-trades device able to perform, but not replace, all the functions of an iPhone. But, unlike with their previous game-changing devices, the Watch also has an iteration — the “Edition Collection” — that is a luxury product. This means that Apple has to now compete with makers of objects whose value couples both nostalgia and technical merit. Apple is well aware of this: Jony Ive, the tech giant’s senior vice president of design, has admitted he loves his mechanical watches and has a “high regard for what currently exists.” Their strategy, it appears, is to simply redefine the style of all watch wearers. Whether this works is a gamble. 

Since buzz started to grow last September, the Watch has been carefully molded to straddle that fine line between tech gadget and style must-have. It’s no coincidence that Apple’s two most senior hires in the last 18 months have come from the high-fashion sphere: Former Yves Saint Laurent CEO Paul Deneve is now vice president of special projects while ex-Burberry chief Angela Ahrendts famously joined as SVP of retail and online stores. Between their reach and their contacts in the industry and Apple’s marketing budget and cult-like following, it’s difficult to think of anyone the tech giant can’t reach (a 12-page Apple Watch “mini-catalogue” insert in the March issue of Vogue did not go unnoticed).

“Sure, it looks cool and the price point is justified because it is solid gold,” says Brown, referring to the $10,000-plus 38mm 18-karat yellow gold option. “But it’s technology that will become obsolete and I wouldn’t buy it just as I’m not the target market for a Vertu phone.” Still, Brown admits he’ll buy the stainless steel version.

The entry-level, aluminum and steel Apple Watch is aimed squarely at the plethora of mid-level timepiece brands, including Movado, Diesel, Citizen, Swatch, Fossil and, to some degree, higher-end G-Shocks. According to Bank of America’s Consumer Mobility Report, nearly half (44 percent) of consumers say they would consider purchasing wearable technology, such as a smartwatch, wristband, or eyewear — with men having a higher adoption rate than women (49 percent vs. 39 percent). Apple is expected to sell 20 million watches this year, helping spur a 150 percent growth in the wearable tech sector.

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Cook and Ive have no doubt seen the promising rise and sudden fall of Nike’s decidedly unfashionable sports fitness wristbands and Google Glass, which debuted on Diane von Furstenberg’s runway during New York Fashion Week with much fanfare. Despite its style-centric marketing, it isn’t obvious how the Watch benefited from the ingenious know-how of industrial designer, and Watch consultant, Marc Newson. Surprisingly, it also doesn’t rest “naturally” under a dress shirt. Given the technology it’s packing, the width of the case is respectful of its wearer — but it won’t look discreet when worn under a barrel cuff dress or tuxedo shirt.

To add to this, the fact that all three versions of the Apple Watch — even the $17,000 38mm 18-karat yellow gold option with modern buckle — will be made in China, no doubt leaving some buyers bristling. No Poinçon de Genève seal here. But, Carolina Milanesi, chief of research and head of U.S. business at Kantar Worldpanel ComTech, a global consumer research firm, suggests “it’s not about competing with luxury brands that sell traditional watches. It’s providing a matching product for those who have a gold iPhone or a customized iPhone case.”

Perhaps the biggest question is: What becomes of the five-figure gold Apple Watch when its technology is obsolete? Unlike an Hermès Birkin or Patek Philippe Perpetual Calendar, there’s no precedent for return on investment. The lack of resale value alone will keep Apple from competing in the same league as — say — a $20,000 Rolex.

Naysayers aside, the Apple Watch is guaranteed to revolutionize the concept of wearing a watch — for better or worse. With the number of traditional watchmakers on the decline and a record number of today’s youth relying on smartphones to tell time, the watch industry will benefit by leaps and bounds from the massive spotlight Apple is shining at the wrist. Yes, the $10,000 gold Apple Watch will sell, just like that (initially) unfathomable idea of a $100,000 electric car that makes no heart-pounding engine roar.