Over the past few days I have come across several reports stating that Apple smartwatches brought in $1.5 Billion more revenue than Rolex wristwatches in their first year of sales. The reason for the comparison seems to be a response to those who consider the launch of the Apple Watch a failure in comparison to the launch of the iPhone in 2007.
While I consider the iPhone revolutionary and rely on Apple products in a personal and professional capacity, I don’t think Apple smartwatches have the potential to render mechanical wristwatches obsolete and I reject the premise of comparing Apple to Rolex.
The first time I heard the word ‘smartwatch’ I was immediately reminded of the watch Dick Tracy used as a two way radio in the comic and 1990 film staring Warren Beatty. The fictional character lived in a time with no mobile phones or Internet access, making the functionality of his watch seem futuristic and innovative. At Baselworld 2016, reality caught up with fiction, with many Swiss watchmakers featuring smartwatch models alongside their traditional mechanical watch models.
No smartwatch has permeated the watch market as much as the Apple Watch, though. This follows logic, as Apple is one of the most successful companies in the world with huge name recognition and a track record of innovation in the tech industry. The smartwatch was also their first product launch after the death of Steve Jobs, marking the beginning of a new era for the company under current CEO Tim Cook.
While haters will always be a part of the ecosystem, it is hard to argue that the Apple Watch is a failure. Aside from developing revolutionary tech innovations, Apple does an amazing job with marketing and advertising and this is evident in their financial success. However, the theory that the success of a product like the Apple Watch would affect the bottom line of a company like Rolex doesn’t hold water with me.
Like Apple, Rolex is a company founded by a visionary – Hans Wilsdorf in this case – that focuses on building upon its own success to bring the past into the future with innovations that fulfill both the needs and desires of their customers. Rolex has a long list of innovations in the mechanical watch industry going back a hundred years.
The main difference between the two companies is the nature of their products. Rolex is a company that manufactures luxury mechanical wristwatches and Apple’s focus is on consumer electronics. The Apple Watch is the first time the tech giant and the luxury watchmaker have seen any overlap in their product offerings. However, this overlap does not necessarily mean that the companies are competing for customers.
The customer profile for the Apple Watch differs greatly from that of a Rolex wristwatch. While the Apple Watch incorporates communications technology that may be enticing to someone who wants to stay connected at all times, it also deters those who find receiving a constant stream of updates and notifications distracting.
There are also those who are reluctant to look at yet another digital screen throughout the day. Those same customers would also have an issue with being forced to update their smartwatches every few years to access updated features and operating systems the same way they do with their smartphones.
What a Rolex customer is looking for is a classic luxury timepiece that is reliable, requires little maintenance, lasts for years and looks great on their wrist. The status associated with the Rolex brand is also a determining factor in the purchase decision. Rolex has been around longer than anyone who actually wears their watches and their legacy adds a value to their products that goes beyond technology and innovation.
A proper comparison for a Rolex would be another luxury watchmaker like Omega or Panerai. Likewise, the Apple Watch should be compared to other smartwatches on the market that compete at similar price points, like those manufactured by Samsung. It may be tempting to compare industry leaders like Apple and Rolex to prove a point about the legitimacy of smartwatches in the luxury watch market, but only time will tell if smartwatch sales figures are inflated by their novelty more so than their potential to decimate the mechanical watch industry.