The launch of the Apple Watch has raised questions about its impact on the Swiss watch industry. Contrary to Apple designer Jony Ive’s remarks that the Swiss watch could be in trouble, there are several reasons why the Swiss have nothing to fear from Apple’s success.
First, the Apple Watch makes wearing a watch relevant to a new generation of future watch collectors. I often ask other professors around the world how many of their students wear watches. The answer is always the same: “very few.” For many young adults who have grown up using their phone to tell time, the idea of wearing a watch is the equivalent of sending a telegraph or storing data on a floppy disk.
The Apple Watch introduces the concept of wearing a watch to many of Apple’s 18 to 35 target market. If it takes off, it is likely that these buyers will eventually consider purchasing other types of watches for events later in life. Talk to any Swiss watch executive today and they will tell you many of their best clients started out collecting Swatches in the 1980s, but eventually started purchasing more expensive brands such as Rolex, Blancpain, Breguet, or Audemars Piguet later in life. Like the Swatch, it is quite possible that the Apple Watch could spark a new generation of watch aficionados and collectors.
Second, the Apple Watch is likely to be a complement, rather than a competitor, to the Swiss watch. The Apple Watch is chock full of technological wonders that would be the envy of Dick Tracy, while Swiss watches are primarily luxury goods and status symbols. Apple is confident it will be able to reinvent its core technology every six to 12 months before competitors like Samsung attempt to render it obsolete. Swiss watchmakers, on the other hand, see themselves as craftspeople producing wearable art meant to be passed down from generation to generation.
Unlike the $350 price tag suggested for a new Apple Watch, most of the Swiss watch industry’s meteoric growth over the last two decades has come from watches priced well over $10,000. The Swiss watch industry no longer competes on the same dimensions that will drive Apple Watch sales.
Third, Apple and Swiss watchmakers have this in common: they are deeply committed to connecting their product with the consumer on a personal level. During the last week’s launch event, Apple CEO Tim Cook touted the Apple Watch as the “most personal device we’ve ever created.” The beauty of the Apple Watch is that it can track people’s micro-movements and provide instant data to help wearers make sense of how they engage with the world around them. Similarly, while conducting research on the re-emergence of the Swiss watch industry, I interviewed a prominent Swiss watch CEO who said, “Your watch is part of you. The watch is you. It shows the type of personality you have: Are you elegant? Unique? Rich? Arrogant? Sporty? All these elements are transmitted through your watch.”
The Swiss watch industry can be confident that a sufficient number of well-to-do and tech-savvy Apple Watch wearers will continue to pine for the highest-end handmade timepieces.
The Apple Watch may keep perfect time, but it is not timeless.
(Ryan Raffaelli is an assistant professor of business administration at Harvard Business School.)
© 2014 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate