Despite its launch back in April, the Apple Watch only recently started to revolutionise the smartwatch industry, with the advent of its partnership with Hermès. The elevation of the genre from tech accessory to fashion accessory has marked the beginning of a new era for the smartwatch industry, which is evolving to appeal to less tech-friendly clientele.
In response to Apple, competitors including Motorola, Samsung, LG and Sony have all started to unveil new models with more high quality finishes and a round form, to be closer to traditional watchmaking. The global market for smartwatches grew by 82% in 2014 according to the Smartwatch Group, from $711m in 2013 to $1.3bn, and could rise to $8.9bn in 2015.
High quality Swiss watch brands have in turn started to respond to the trend amidst the fear that smartwatches could move into their luxury segment. The Swiss watch industry is the largest in the world by value of exports, but has recently been hit by uncertainty of economic outlook in emerging markets, particularly a reduction in extravagant spending in China. If smartwatches win the battle for the wrists of the wealthy, the industry would be in danger.
The biggest threat is in the market for watches costing less than CHF 1,500 (£1,000). Expensive Swiss timepieces remain a means for the wealthy to distinguish themselves, but more is at risk for the brands who share a price bracket with the Apple Watch and its counterparts. For the companies that have more mass-market appeal, market share is crucial. In Deloitte’s 2015 Swiss Watch Industry Study, 25 percent of respondents were worried about the competitive threat from smartwatches, compared with 11 percent a year ago.
Concerns about smartwatches are driving innovation across the industry, with brands trying to maintain their traditional forms, whilst concealing a tech functionality. Montblanc has launched “e-Straps” for its watches, which link to smartphones. Swatch has put Visa payment technology into its trademark colourful designs. Frédérique Constant’s Horological Smartwatch has a conventional face with hands, but fitness tracker technologies hidden in the movement. TAG Heuer is developing its Carrera Wearable 01 smartwatch in partnership with Google and Intel; it will run on Android Wear and therefore compete directly with Apple, Samsung and others.
Although Swiss watches do not match the functional scope of the Apple Watch, they do have the crucial advantage in that they do not become obsolete after a few years, nor need recharging on a daily basis. And although the technology in Swiss smartwatches could succumb to these problems, they are trying to counteract it: both the Horological Smartwatch and Carrera Wearable 01 are expected to be upgradeable and allow updates to the technical components to achieve a longer product life, as well as having especially long battery lives.
The smartwatch industry may actually directly benefit traditional watchmakers: for the brands that have had smartwatches on the market since 2000, such as Swatch, Apple has created opportunities for them by boosting overall demand for the product segment. Furthermore, if smartwatches are encouraging younger people to wear devices on their wrists, the competition can only be advantageous for Swiss watchmakers.