Apple Watch And The Threat To Rolex - InformationWeek

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9/11/2014
08:06 AM
Chris Murphy
Chris Murphy
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Apple Watch And The Threat To Rolex

Watchmakers are now firmly in the software business, like it or not. You probably are, too.

I don't know if I want a smartwatch like the new Apple Watch, but I'm certain that the next watch I buy will be a smarter watch. That reality is the simple lesson of this week's Apple Watch launch. No matter your business, if your company doesn't innovate with software, you risk losing your intimate tie with customers and surrendering profits to someone else.

Apple Watch starts with the premise that people will want to do myriad things from a wrist device, so Apple created a gorgeous platform to power all those things. Some people will want that $349 instrument.

It's just as likely, though, that people will want a watch that only does two or three of those functions extraordinarily well. Tell the time and track their activity like a FitBit, so competitors better have something as nifty as Apple Watch's circle display that fills in as you approach your steps-per-day goal.

Many watchmakers understand this software push. Timex's latest Ironman One GPS+ aims to be the do-all smartwatch for fitness fiends, complete with wireless connectivity without a smartphone tether.

But my headline mentions Rolex. It's absurd, right, that a luxury item you might spend $10,000 (on up) for could face any threat from a $349 gadget? But the threat isn't Apple Watch per se; it's software. Is there any software that Rolex customers will want? Think about payments, like the new Apple Pay. Customers might want everything a Rolex brings them today, plus just the convenience of paying by watch. If so, can Rolex write and blend in software that has all the elegance, strength, and class that the brand represents? Leaders at BMW and Mercedes stare down this challenge every day.

My colleague Thomas Claburn puts the Apple Watch challenge this way: "It marks the migration of technical functions into the objects and activities of everyday life."

Everyone who makes a physical product or provides a service must ask: What's my software strategy? What's just the right amount of technology to bring into my product? Could someone create a better interface that steals the value of my product, so that they're the star and I'm the supporting cast?

Fiat Chrysler CEO Sergio Marchionne has said he worries that his company will shoulder the cost of bringing apps into vehicles, only to "provide a venue to host other people’s parties."

Capital One is striving to act more like a software company, courting developers and engineers because it knows a bank's customer experience will be delivered via software. 

Apple Watch begs the question for IT leaders: Who's leading the software development charge in your industry? Hopefully it's someone at your company.

Need to deepen your tech leadership skills, or those of your team? Join me at the one-day InformationWeek Leadership Summit Sept. 30 in New York City, to engage with IT leaders tackling these very issues. Use promotion code BLSUMMIT for a half-off discount for InformationWeek readers.

Chris Murphy is editor of InformationWeek and co-chair of the InformationWeek Conference. He has been covering technology leadership and CIO strategy issues for InformationWeek since 1999. Before that, he was editor of the Budapest Business Journal, a business newspaper in ... View Full Bio
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impactnow
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impactnow,
User Rank: Author
9/17/2014 | 10:53:40 PM
Watch relevance

You raise an interesting point, I was recently talking to some college students who didn't wear watches they thought they were antiquated and could get the time from their phone or tablet. They thought the idea of buying a high end time piece was ridiculous. The numbers may very well shift from mechanical to smart watched over the next twenty years and luxury brands will need to decide if they will remain the same if their market shrinks or simply disappears. I am curious how many people reading this are still wearing watches regularly or are you relying on your technology for time?

progman2000
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progman2000,
User Rank: Ninja
9/16/2014 | 7:10:29 PM
Re: Wristwatches will need a comeback
@Mark63,

I'm curious, where did you get those numbers?  I would have thought mechanical watches would have a small percentage of market, especially if we are calling G-Shock type watches electronic.  Am I misreading that?

And yes I would think the electronic market would be more likely to switch than mechanical, but also think the lions share initial will be apple oriented techno types who might not even have a current watch.
ChrisMurphy
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ChrisMurphy,
User Rank: Author
9/16/2014 | 11:51:10 AM
Re: Wristwatches will need a comeback
I agree. What I wonder is if there will increasingly be a category that falls in between -- mechanical, with just a dash of software. Our cars have certainly moved that way, with more software added to the mechanical piece all the time. 
mak63
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mak63,
User Rank: Ninja
9/16/2014 | 12:40:19 AM
Re: Wristwatches will need a comeback
@progman2000,

I agree with your post. And here are some interesting numbers from last year:
Mechanical Watch market share is 77 %
Electronic Watch market share is just 23 %

I won't disclose my preferences in wrist watches, but I believe those who prefer an electronic watch are the most likely to switch to a smartwatch, don't you think?
rradina
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rradina,
User Rank: Ninja
9/15/2014 | 10:00:11 AM
Depends....
I think it depends on whether or not a software-driven watch is able to offer something compelling such that everyone wants that one thing.

BlackBerry (a.k.a "CrackBerry") brought corporate e-mail and calendaring to phones.  It was wildy popular with business but monthly service costs kept the average associate and consumers out of the loop.  When the iPhone appeared, it didn't need special gateways and costs to deliver calendaring and e-mail.  It also redefined how customers thought of data and accessing the Internet on a phone.  (Remember Apple's TV ads when they talked about their phone offering the "full web"?)  Once the app scene exploded, feature phones were history and BlackBerry and Microsoft failed to understand the shift.  

Regrettably, Apple's watch is a forced accessory for iPhones.  While I understand the strategy to drive phone sales, this is a missed opportunity.  Under Jobs, Apple seemed content to allow phones to replace iPods and also realized requiring a Mac to use iTunes was a mistake.  It's also a mistake to require an iPhone instead of integrating with all phones (well, at the very least Android).  Android is the 800lb Gorilla in the room and Apple just excluded it.  If their watch achieves something compelling, why would they want someone else to satisfy that craving for 80% (or more) of the market?  For this fact alone, I think Rolex and everyone else will have time to react when Apple's watch manages to offer a compelling feature that everyone wants.
progman2000
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progman2000,
User Rank: Ninja
9/14/2014 | 10:25:45 AM
Re: Wristwatches will need a comeback
Indeed, Rolex consumers are (for the most part) a different demographic.  I am a bit of a watch aficionado and frequent the watch forums as well.  Once you start getting into the $5,000+ category of watches it is all about form and not function.  The true collectors appreciate those watches because of the beauty of the mechanical movements, and have no desire for it to be part of the IOT.  And in truth Rolex is on the low end of luxury watches when you start talking about Patek Philippe, Audemars Piguet, etc.  These swiss manaufacturers will never compromise their mechanical timepieces by having some hoky electronics put into it.
zaious
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zaious,
User Rank: Ninja
9/13/2014 | 12:55:30 PM
Wristwatches will need a comeback
I do not think Rolex users will switch to iWatch, the Rolex users are a different group of consumers.

However, right now I see many people who do not use any wristwatch. They just simply pull out the phone from the pocket and glance at it. I will see how people will get back to their old habits. 

Similarly, due to rise of cheap wristwatches, usually muggers will not take your watch. Let's see if this changes with people carrying iWatches.
jries921
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jries921,
User Rank: Ninja
9/12/2014 | 1:41:09 PM
Fail to see the point
I ask for very little from my watch: I want to know what time it is, and sometimes how much more time I have or how much time has elapsed.  And it's sometimes useful to set an alarm.  I can do all of that from my existing very stupid digital watch (but it needs a new band).  It certainly doesn't need networl access.  A cellular phone is large enough that it's possible to type and convenient to push icons; a watch that is actually going to fit on one's wrist isn't and that is the difference.

 
ChrisMurphy
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ChrisMurphy,
User Rank: Author
9/12/2014 | 9:43:18 AM
Re: Digital watch vs Rolex??
I'm with you Gary, I still wear a watch, since I hate pulling out my phone for a quick time check. Professionaly, it's very practical for meetings -- I can glance at my watch during an interview or team meeting, and either it goes unnoticed or the person knows I'm just checking the time, but if I pull out my phone they wonder "why is he checking messages during our discussion? How rude." 

I agree that this supreme do-all digital watch isn't a huge lure, but I do think a watch that does Time Plus Something will appeal. That wrist real estate is super handy, so putting time plus that one single thing you highly value or do a lot will appeal (Time + Texts from my wife and kids; Time + My Fitness Goal ...).

Apple couldn't bet on that one thing, because it's only making one watch, so it had to throw all those things in. Watchmakers can specialize their digital tools to do that one thing perfectly.

   

 
SaneIT
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SaneIT,
User Rank: Ninja
9/12/2014 | 7:48:48 AM
Re: Digital watch vs Rolex??
At the current price point, smart watches aren't compelling enough for me to go out and buy one but as you mentioned being able to access some of the smart phone functions without removing it from my pocket would be the one reason I want to try one.  Even having it sitting on my desk I have to stop what I'm doing, pick up the phone and see who just texted me and if I need to get back to them right away.  If my watch could flash up at least part of the message all I have to do is look down and twist my wrist a little.  Also mapping software would be great for when I'm traveling and walking around.  I hate taking my phone out and stopping to avoid walking into things.  Maybe I use my smart phone a little differently but I think the quick glance at snippets of data would greatly reduce my smartphone screen time.
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