In light of Apple's announcement of its new smartwatch, the Apple Watch, the often secretive Swiss watch industry has remained quiet despite Apple's planned attack on their centuries-old business. But luxury watch manufacturers have already been dabbling with smartwatches of their own, while trying to preserve their products more timeless appeal.
When the Apple Watch was first announced, many believed that it would only appeal to a different class of customer who prefer technology over prestige. However, now that Apple has released details about their Apple Watch, many experts are now starting to think it will stoke sales of luxury timepieces and lure customers away from the classic, more traditional watch manufacturers.
"Apple has the potential to make the watch cool again," said CCS Insight mobile analyst Ben Wood, a confessed wearable gadget freak. "I think the Swiss watch industry is going to be absolutely delighted."
Swatch has already spent time dabbling with smartwatch technology for more than a decade and already makes components for fitness band wearable devices.
"Apple is not the only company which is about to toss a smartwatch on the market," Nick Hayek, chief executive of Swatch, the world's largest watchmaking group, told SonntagsBlick in January. "This is not a threat but a huge opportunity for us and the Swiss watch industry."
The upcoming Swatch Smartwatch will include a chip that allows users to make contactless payments with just a swipe of your wrist. It will use long-lasting batteries that will outlast the battery included with the Apple Watch, and it will work with both Apple and Android smartphones.
Montblanc has created another new twist for the wearable market, which combines a traditional mechanical watch with an interchangeable strap containing a Bluetooth connected device. This device hopes to offer "the best of both worlds," according to Berenberg's luxury goods analyst, Bassel Choughari.
"It creates a bit of a grey area between Swiss-made and probably made-in-China products, so that could be a bit difficult to manage over time," Mr. Choughari said of the danger to brands.
The threat that Apple will cannibalize the existing demand is most acute for Swatch, analysts say, due to the fact that it has the highest proportion of products selling for a few hundred dollars, instead of several thousands of dollars as most of the high-end brands do.
If Apple sells 20 million watches in the first year as many analysts are predicting, and these purchases divert buyers from other watch brands, Swatch could suffer a 6 percent hit to annual revenue, according to calculations by Barclays analysts.
