Author(s): Peter Bryer
Wearables and connected things were key themes at Mobile World Congress 2015, but most top players from the wristwatch industry were conspicuously absent from the event. Guess Watches was one of the few exceptions.
CCS Insight believes the watch industry is keeping its distance from such events to prevent their products being associated with commoditised consumer electronics. Watchmakers are likely to continue to distinguish themselves with exclusive retail channels and brand marketing despite the direct competitive threat posed by the likes of Apple and Motorola.
We believe that more watch companies will enter the area of connected wearables, but will do so on their own terms. Most luxury brands will protect their high-end appeal and exclusivity by deliberately avoiding a hot technology trend rather than risk appearing obsequious to the sprawling telecommunications industry.
The strategy could prove to be valid as luxury watch brands are often purchased for their appeal as jewellery over their pragmatic functions. Exclusive handsets from Vertu released as the company established itself are an example of when design and scarcity were prioritised before features.
Few industries have been immune to the expanding features of smartphones and related accessories. As sensors become more accurate, and as data collection and lifelogging become more common, watches falling within "reasonable" price bands are likely to face pressure from competitive smartwatch substitutes. Some watch brands could see a trade-off between features and market relevance — TAG Heuer, for example, retails some models at $5,000 to $10,000, and could introduce a connected version. Industry rumours are pointing to this possibility. The partnership between watch-maker Fossil and Intel is also worth noting, with clear potential for a smart device.
However, CCS Insight believes that the budding smartwatch market is of no particular interest to top-tier luxury brands. Watchmakers like Patek Philippe and Rolex sell models as status symbols and heirlooms to be passed down through generations. This contrasts with smartwatches, which quickly develop an IT-type obsolescence.
Baselworld is the dedicated event for the watch and jewellery industries, and will be held later this month. CCS Insight will follow announcements from the show, particularly those related to wearables. As we have highlighted in previous blogs, style brands like Swarovski recognise the industry overlaps and are delivering connected products (see Daily Insight: Beauty and the Beast). Luxury brands have no reason to place themselves in a subservient position with respect to mobile device makers, but the timing could be right to explore the demands of a highly connected audience.