June 11, 2015
Mercedes' MB Companion app for Apple Watch
The Apple Watch announcement not only stirred interest in the product itself, but also made the smartwatch category significantly more credible, according to a new report by Digital Luxury Group.
Both the product announcement in September 2014 and the release announcement in March 2015 yielded dramatic rises in online searches for Apple Watch across the world, which had a cascading effect across other brands as consumers sought to understand and find the best deals in this nascent category. The buzz surrounding the Apple Watch has transformed the potential of the smartwatch category, forcing luxury brands to wade in and experiment with their own products.
"Even before any luxury brand announced a smartwatch or other smart features, consumers worldwide were already researching this kind of product," said Robin Hurni, research analyst at Digital Luxury Group, Geneva.
The "Smart Watch Feature" report can be downloaded here
Still wavering
Although smartwatches have been on the market for a few years, only Apple Watch's emergence late last year sparked a palpable response from luxury brands.
Digital Luxury Group notes that the first actual movement from the luxury sector was Montblanc's E-strap announcement in January.
The brand with the most smartwatch intrigue hovering around it, as measured by searches, is Tag Heuer, followed by Rolex, Montblanc, Breitling and Omega.
Montblanc e-strap app
As the report also points out, these brands have strong connections to the sports world or similar realms. Tag Heuer is connected to racing, Rolex to tennis, Montblanc to equestrian, Breitling to aviation and Omega to the Olympics.
However, Rolex and Omega have not hinted at a smartwatch in any capacity.
Tag Heuer's latest campaigned, "Don’t Crash Under Pressure," is especially keyed to athletic prowess. Coincidentally, the most persuasive and commonly proffered reason for a smartwatch has to do with monitoring health.
In fact, Tag Heuer ended up unveiling its partnership with Google and Intel for a smartwatch at Baselworld earlier this year.
Tag Heuer smart watch reveal
Movement into the smart watch arena can also be tracked according to degree of luxury. The only ultra-high luxury brand interested in this field is Bulgari, according to the report.
The highest tier brands are doing exceptionally well right now, so the urge to branch out is less pressing.
Brand portfolios tend to be split along price points, and the lower end of brand portfolios will see the biggest impact from smartwatches.
The most luxurious mechanical watches will remain unscathed.
Cartier CEO, Stanislas de Quercize is quoted in the report as saying that the Apple Watch "is entirely complementary" to the classic watch, and is "another way to get information, but it doesn’t have the same value: when you look at the time on a smartphone or connected watch, they don’t inform you of the preciousness of passing time."
Interestingly, Apple is positioning its smartwatch not just in the entry-level category, but also in a higher tier, a move that has been met with much skepticism.
The report notes that the U.S., Britain and China showed the greatest interest, in terms of search volume, in the Apple Watch during its key development stages.
Russia showed the most interest in purchasing the watch, based on queries involving some form purchase intent. However, searches for Apple Watch in China bring up ecommerce sites, which may mean that purchase intent is strongest there.
Not so fast
Luxury Daily columnists recently argued that Apple’s smartwatch may be all the buzz right now, but it faces serious challenges, both on a micro- and macro-level.
The Apple Watch’s pricing scheme is tenuous at best. There is little justification for anyone other than a very rabid, very rich Apple fanboy to buy the higher-end Apple Watch offerings. For the highest-end version, the Apple Watch Edition, Apple seems to be trying to cut into the luxury watch market’s user base.
Appealing to the luxury watch consumer, however, is a lot more complicated than just making a gold version of something and charging five figures for it (see story).
Luxury brands, however, are positioning themselves to benefit from potential Apple Watch dominance.
German automaker Mercedes-Benz is helping drivers obtain the ultimate in mobile connectivity with an application for the Apple Watch.
Mercedes is positioning its Apple Watch app, the MB Companion, as a way to help drivers be “guided all the way” while in their vehicles through navigational touch points. Although Apple Watch is not yet widely worn, implementing an app in the wearable’s early stage shows Mercedes’ modernity as a brand (see story).
Smartwatches may get a boost of relevance once they begin synchronizing with more systems integral to daily life.
"The Apple Watch Edition collection (starting at $10,000) is an attempt to convey the image of Apple as a true luxury brand but the business reality is different," said David Sadigh, Founder & CEO at Digital Luxury Group.
"We anticipate Apple to generate 80 percent of their sales with Apple Watches priced under $700, a segment that will have more impact on American and Japanese watchmakers than on Swiss ones," he said.
Final Take
Joe McCarthy, staff reporter on Luxury Daily, New York
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