Traditional Timepieces Still Reign
Baselworld 2015 opened on 19 March and continues until 26 March. It’s Swiss in origin and focus, but has become the watch and jewellery industry’s most important international trade show, with more than 1,500 brands from around the world exhibiting at the event. Mobile World Congress broke its record for attendance with more than 93,000 visitors this year, but Baselworld is expected to attract more than 150,000.
This is the first iteration of Baselworld since the introduction of the Apple Watch, an outside force that many at the show consider more of a distraction than an influence. The managing director of Baselworld quipped that smartwatches come with “planned obsolescence”, meaning that they aren’t in the same heirloom class as products from luxury watchmakers. There’s so far been an ostensible attempt to exclude smartwatches as a theme in public discussions and even in the show’s daily magazine. Such an omission isn’t a surprise: CCS Insight has previously stated that the watch industry will maintain a clear dividing line between commoditised connected watches and its exclusivity.
However, there has been some smartwatch news from the event — perhaps the most high-profile being the announcement of Tag Heuer’s collaboration with Google and Intel. The Silicon Valley crossover into Swiss watch jurisdiction is an indication of the growing influence of connectivity across business lines, and made headlines on popular tech Web sites and mainstream newspapers.
There’s significant buzz surrounding the partnership, but no prototypes and no details were shared. We believe that the lack of product specifics indicates the reactionary nature of the collaboration. The announcement wasn’t a total surprise: CCS Insight had stated that a connected watch from Tag Heuer was a strong possibility given that its prices start at $1300 and reach about $10,000 (see Daily Insight: Fashion Restatement). This means an overlap with higher-end versions of Apple’s watch that leaves Tag Heuer one of the companies potentially vulnerable to competitive pressure.
However, the true threat posed by the Apple Watch is still unknown — the proclamation of some watchmakers that smartwatches remain an unidentified market isn’t without merit. Apple is hoping to sell higher-end watches on a mass scale without the benefit of a subsidy model. There will certainly be a strong wave of loyal fans lining up as sales start, but subsequent volumes will be telling. If trade slows, we believe that Apple will move to work closely with mobile operators for bundled iPhone and Watch deals.
Apple is fighting hard to prevent its Watch from becoming regarded as a consumer electronics product — an Apple representative at a launch event recommended that attendees have a “fitting” rather than simply try on the device, for example. But luxury talk doesn’t make a luxury brand.
We disagree with those drawing parallels between the luxury Swiss watch market and the market for smartphones after Apple’s arrival. It’s wise to be prepared for disruption, but most high-end watchmakers aren’t rushing to produce crossbreeds. Tradition is part of the product: the Swiss watch industry has a robust history of style and precision, and Switzerland exported more than $22 billion worth of watches during 2014.
Baselworld, like Mobile World Congress, is certainly feeling Apple’s spirit, but the show continues focus on traditional Swiss precision and pure luxury. Smartwatches are a still sideshow.
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