Watch Makers’ Dilemma!

rolex

Traditional Watch Industry is fast facing disruption. It is all transforming into a Smartwatch Industry.

There is a new hush in tech circles. Merger of the Classic Watch Industry and Tech Industry in cross roads as discussions go on. Triggered by countless Android wearable initiatives and smartwatch efforts fueled by the latest Apple Watch rumors. Probably this will be on lesser extent but Watch will probably disrupt the Watch Industry the same way iPhone revolutionized the mobile industry, or just as iPod disrupted the portable music player and music label industry back in the 20s. Apple Spring Forward watch even will be held on Monday.

If “Mobile First” was the success story of the iPhone and follow up wannabies. I have little doubt on the smartwatch and the Internet of Things (IoT) future. What do we gonna call it when things emerge in the wearables first? It’s already mobile so what it would be “Personal or Intimate First” User eXperience has in store for us?

The watch industry will never looked the same after Monday

Here Apple’s legendary execution and scale of Integrated Systems will have an upper hand. Specially HomeKit/CarKit/HealthKit and the extensions of them probably with iPhone and Touch ID integration. Touch ID is Apple’s hidden absolute innovation on the privecy and security issues we faced as the tech industry since the legendary UNIX username and password protocol came in. Watch already seem to make the strongest case for many things to come after the smartphone revolution.

When most seem to doubt why would anyone want to carry a secondary device, when BYOD is in full swing, do we have to carry another? I speculate why would anyone NOT want one if Watch supposed to get us the promised of the following?

Presumably, Watch (all smartwatches someday) can resolve

1. All our access worries (Home, Car, Door Keys, proximity cards, etc.)
2. All our wallet worries (Credit, Cash, Reward Cards, Clubs, Memberships, etc.)
3. Identity worries (National ID, Driver License, Logins, Social Security, Insurance, Health etc.)
US government has just endorse Apple Pay I heard. *Please read the footnote.
4. It will probably do some of the smartphone functions better than imagined (Fitness, Music, Location, etc)
5. Possible emerge of the HomeKit/CarKit/HealthKit related IoT sub-ecosystems to boost

The first 4 points alone itself is more than enough for Watch to be another game changer device. If things fall well in place as Apple planned, I think Apple Watch V1.0 can trigger all that as it is proposed right now. From Apple Watch V2.0 and beyond we will see the new user cases of the WatchKit that we are unable to see clearly right now, but I am sure we will be taking about “Intimate First” UX in no time!

First WATCH ads appeared on Vogue Magazine, not anywhere near in any Tech Magazine. No surprise. Apple’s message is clear. Not many tech brands can get away with spending near $200,000 grand per page and simply having WATCH on a blank page to give the message. This is where tech circles don’t understand and underestimate Apple. Apple knows how to make technology common place.

It may be specific, For example my dad all he needs will ONLY be the watch, for the first 3 points he will probably LOVE it, We tried but he never wanted or carries a mobile phone, doesn’t need one. Only worry is Mom’s not knowing where the hell he is in the town, the watch probably can resolve that too by ping back in the future which I would love to have on my kids too: -D. This is just two user cases I see for Watch to sell in millions.

Then the question of how do we address the intimacy UX now with already phablet sized and growing phones? Viola! Suddenly the watch makes far more impressive wearable for me than the original iPhone ever did in 2007! or the vaporware Google Glass which kille the intimacy in 2014!: -D

Meanwhile Swiss watch makers like TAG Heuer, the biggest brand in luxury goods group LVMH’s watch portfolio, had until recently largely dismissed the threat of these “smart” gadgets or Watch saying it was not a threat to them. Then suddenly changed the tone to rush up smartwatch projects to rival this such as TAG Heuer. It also seems that TAG Heuer might be starting to realise that making a smartwatch isn’t as easy as it sounds. That’s borne out by the attitude of Biver to the Apple Watch. In September last year, he said Apple’s smartwatch was “too feminine” and “looks like it was designed by a student in their first semester.”

But later LVMH watch chief Jean-Claude Biver says he had changed his mind on the subject. In his Bloomberg interview, Biver is now all for the Watch, claiming that “it’s a fantastic product, an incredible achievement.”

11970-5452-150301-Style-l

UK Style Magazine runs Watch featured.

“Smartwatches represent a challenge to the Swiss watch industry that is comparable to the appearance of quartz technology. We cannot ignore this tsunami that is coming closer,” Semon said.

Biver, who had already outlined plans for a smartwatch, said he had struck several partnerships and was mulling purchases to help come up with an original upmarket offering.

“We started on the project about four months ago. We have done several partnerships and might also do acquisitions,” Biver, head of LVMH watches and TAG Heuer interim chief executive, told journalists at the brand’s headquarters at La Chaux-de-Fonds in western Switzerland.

But the problem is whatever they come up with TAG Heuer’s smart watch will not sell. There’s no market for it.

As an industry observer as I can see now, be warned. There is a real problem in luxury watch maker industry trying to imitate the smart-watch market yet to be blossomed. Even if smart watch is not poised to break smartphone scale revolution, there will be sufficient clues gathering that watch industry will seriously be disrupted.

There is a technical reason why Apple Watch requires pairing with an iPhone, and TAG Heuer’s or any to be smart watch will need to pair with a smartphone to even have a chance of being as feature-rich as Watch. Technology isn’t there for them to be standalone yet. If you ask Apple why Watch has to pair with iPhone while it can be standalone, Tim would say underline technologies have not emerged yet. There is no chance Tim can have GSM/ GPS receiver and Apple A8 chip in Watch with sustainable battery life even if he wished. So for a foreseeable future Watch will off-load battery and cellular heavy functions to an iPhone.

So no TAG Heuer or Rolex smartwatch has the luxury to off-load its functions to its owner’s iPhone, but an Android.

A Tsunami is coming for the luxury brands

That’s where the problem begins. Android copied iPhone and could sell it to the developing world for a cheaper price to gain momentum. But if a la carte TAG Heuer pairs with Android, can they make it cheaper falling in to the Casio and Citizen level? or a Chinese made level? Or else can they engineer it higher than Apple (or Google) would do? Also Apple isn’t going to re-engineer iOS for TAG’s specific benefit, so TAG’s smart watch won’t pair with an iPhone the way Watch does.

In order to have even a remote chance of being as feature-rich as Watch, then, TAG’s smart watch will sure have to pair with an Android phone. However, TAG Heuer wearers aren’t Android fans. Rich people buy TAG watches, but rich people don’t buy Android phones. They buy iPhones, Alas!

Watch Edition edition would be as premium as any Swiss made gold.

Ultimately, this is the basic dynamic of the entire luxury watch industry. Replace TAG Heuer with Rolex or any other high-end Swiss watchmaker, and you see the problem is exactly the same.

A Rolex smartwatch need to pair with an Android phone to be anywhere near as feature-rich as Watch, but Rolex users don’t buy Android phones. So on and so forth. None of their smart watches would sell. There are no rich-people-who-use-Android-but-buy-luxury-watches to wear.

lg

Korean LG Web OS Smartwatch

huawei

Chinese unrivelled Huawei Smartwatch

withings-activite

Beautiful Withings Activité Smartwatch

Over the next decade with few versions of Watch becomes more powerful, Google and the China have time to catch up. Almost all watches will become smart watches, just as how all cell phones have become iPhone clone smartphones. The luxury watchmakers who tires to make smart watches will fail because they don’t know the tech, there won’t be a niche market for their already niche luxury products. Even the luxury watchmakers who don’t try to make smart watches will still see their market continuously shrink.

They’re damned if they do and damned if they don’t. I would call this as “Watch Makers’ Dilemma!” The watch industry will never look the same after Monday, 9, 2015.

Jony Eve has subtly put this in to context in an interview with his mellow words because he doesn’t want to be too dramatic on this, but the message is now very well written.

“Switzerland is fucked”.

NOTE *Apple have mentioned the usability of Apple Pay with the watch, but I failed to see how Touch ID get used here with Apple Watch, Do we have to pull iPhone to OK a payment with Touch ID? Then the purpose is probably lost so how would Apple will implement this? Also in the long run I wish there is a Touch ID in the back of the watch strap. Because I sense we are in a “Peak iPhone/ Smartphone” era as speculated that still has to carry over the burden of legacy. A Touch ID Sensor for authentication, or a secondary method. On March 9th Apple’s Spring Forward Watch event we may see how Apple actually would implement this if they launch Apple Pay along with Apple Watch.

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