Apple Watch And The Threat To Rolex - InformationWeek

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IT Leadership // CIO Insights & Innovation
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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,
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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?

ChrisMurphy
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ChrisMurphy,
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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. 
ChrisMurphy
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ChrisMurphy,
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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.

   

 
Thomas Claburn
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Thomas Claburn,
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9/11/2014 | 7:23:39 PM
Re: Packing technology into a Rolex is nothing new
Strangely enough, I think if Apple had designed a fully mechanical watch (maybe with an Bluetooth transmitter to make bio data available to iPhones) it would have been receieved at least as well as the Apple Watch and would have even broader appeal.
Thomas Claburn
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Thomas Claburn,
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9/11/2014 | 7:21:13 PM
the swiss?
>None of them raise the notion that Swiss watchmakers could innovate using software. 

They could but I think there's a reason US software companies, particularly Apple, Google, and Microsoft, have done so well. Good software design is difficult. I cannot think of a single software application from a hardware vendor (except perhaps TiVo) that I enjoy using. This becomes particularly obvious anytime you use an application designed by a printer company. It's invariably awful.
Laurianne
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Laurianne,
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9/11/2014 | 1:46:26 PM
Re: Packing technology into a Rolex is nothing new
Chris captures the crux of the worry for the Rolexes of the world quite well. What happens when the user decides he wants Apple Pay on his Rolex, which he is not interested in giving up? Who's in charge -- Apple, or Rolex? The software companies, or the car makers?
Charlie Babcock
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Charlie Babcock,
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9/11/2014 | 1:30:20 PM
Evolving products in software; the rest of the world will catch on
Apple is a great example of a company that redefines a product through its software and by integrating external services into the software. It's leading in this space, not owning it forever. I assure you, even those devoted to pure mechanical art will find a way to incorporate software into a high end, digital version of their product. It will be necessary to survive. Americans excel at capturing and interpreting the wishes of consumer culture in software. The Swiss, the Germans, the Japanese and the rest of the world will catch on. Not sure when they'll be able to catch up.
ChrisMurphy
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ChrisMurphy,
User Rank: Author
9/11/2014 | 12:50:54 PM
Re: Packing technology into a Rolex is nothing new
I've seen a number of articles today (Wall Street Journal, Daily Beast, Reuters) discussing the competition for Swiss watchmakers. All of them just assume it's today's Swiss watch vs. the Apple Watch. None of them raise the notion that Swiss watchmakers could innovate using software. 
David F. Carr
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David F. Carr,
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9/11/2014 | 12:27:47 PM
Re: Packing technology into a Rolex is nothing new
Rolex is more than 100 years old and probably has a good chance of being around for another 100 or two. I'm sure you're right that they will be resistant to fads, but they didn't get this far by ignoring new technologies, just by choosing them carefully.
David F. Carr
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David F. Carr,
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9/11/2014 | 10:40:09 AM
Packing technology into a Rolex is nothing new
You can see it in the product image displayed above, for the Submariner watch boasting water-resistence to 3,000 feet 1000 feet/300 meters. Rolex has been packing exotic features into its watches for a long time, but doing so with a restrained sense of style. The point of Chris's column is not that Rolex lovers will give up their treasured item in favor of an Apple Watch but that Rolex (and every other product creator) needs to be thinking about the role embedded software will need to play in their future products.

That doesn't mean the next new Rolex watch will look or function anything like an Apple Watch, but you can bet Rolex engineers are thinking hard about what digital technologies will make sense in their products of the future - and how to introduce them in a way that avoids alienating the customer base that loves its mechanical purity.
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