As I look at the market for smartwatches today, it often seems as though I’m looking at two different realities. The first is where the market is for smartwatches today. Meaning what the data I have says about why people are buying them, what they do with them, what they like and don’t like, and much more. As I study this data, I’m not convinced the behaviours we are observing and acquiring data on represents where this market is headed. On the other hand, I spend a lot of time analysing the future for this category but have no data to justify my convictions of where the smartwatch market may be in 3-5 years. Since we have a great deal of data on what the market drivers and core value propositions are today, it’s easy to say these are the things consumers care about today but much harder to say these are what consumers will care about tomorrow. But it does also help me look at products now and have a good sense of what is going to sell and what isn’t based on our behavioural data. And I can tell you, with deep conviction, this Tag Android smartwatch is not it.
While I think Android smartwatches have potential and a role to play, I’m not sure the luxury watch brands have the audience for an Android smartwatch today. Those who buy luxury smartwatches are doing so for the brand, prestige, and things unrelated to the technology benefits of a smartwatch. This is not to suggest that market does not eventually convert to smarter watches but, as of now, those are not the customers buying smartwatches.
While this Tag Smartwatch looks fantastic and is hopefully the benchmark by which all other Android smartwatch vendors strive for, it carries with it some fundamental issues that will challenge many watch brands regarding their decision to bet on Android Wear.
First, and especially in this case, it is safe to assume most of Tag’s prospective buyers for a $1500 watch would be iPhone/iOS owners. After all, they’ve been shown to favor “premium” products. While it seems there are elements to Android Wear which work on iOS, if you want to install any of the third party apps to your smartwatch from the Android Wear store, you need to be on the Android ecosystem. There may be a way you can do this from the browser version of the Play Store but I’ll need to clarify that. In either case, not an elegant solution for your more premium/luxury customers.
Second, beyond the watch faces, not much is customizable for Tag to differentiate their Android solution from anyone else. While their brand alone may command a premium (and this may hold true if other luxury watch brands ship Android Wear-based smartwatches), it is unclear how strong that will hold up against other brands who ship essentially the same product at much lower prices. Leveraging the differentiators will be more difficult as luxury watch brands ship smartwatches based on Android Wear. But again, the dynamic may play out similar to analog watches where the only differentiator is one watch face and the brand’s marquee. How Android Wear works or does not work with iOS will be a key factor for luxury watch brands to address.
All of this feels like a sign of the times around this smart watch category. Apple shipped 7m Apple Watches since launch and they are on pace to acquire 50% of the Swiss/luxury smartwatch sales in 2015 — despite being on sale for only eight months of the year. Next year, they will easily surpass Swiss/luxury watch sales. When you move that kind of volume, others will not sit idly by and watch. However, the rush to compete with Apple will create a lot of awkward products — par for the course when you are where we are in a new category.
I’m still optimistic in my prediction that 100% of all watches under a $1000 price tag will be smart within 3-4 years and, eventually, all watches will have intelligent components to them. But we will have some awkward years between now and then.
I take you at your word that it’s an awkward attempt, but if not Android Wear, what?
It will be Android Wear, I don’t see much in terms of realistic options. However, I think this also makes it very hard for the luxury brand guys, perhaps more difficult than they imagine. Ideally, Google would let them add more customizations to the Android Wear software, however, I’d assume most those brands are not experts in software or UI so again presenting a challenge.
What about a partnership with Apple just like Hermes did? I think that makes a lot more sense for the luxury watch makers. There is plenty of meat left on the bone for both Apple and their partners to both make their margins. This would let them both sell to the same premium customers. Apple could do the same thing they are doing with Hermes and sell a custom band and face that is exclusive for Tag.
With the way that Apple controls their ecosystem even when they do decide to open up watch faces to 3rd parties I am sure that they would be able to easily reject any watch face that is a copy of their luxury brand partnerships or any ones that steps on the IP of a known brand.
Agree.
@@benbajarin:disqus then in your world all those Vertu Phone owner does not existed therefore will never buy an android luxury smartwatch giving that only poor people use Android Phone.
besides
what the difference between an IPhone 5 that cost 0$ on contract available to the poor to a 6S, that rich folks like you will buy, or even the base Apple Watch to the Gold one?
Lot’s of flawed assumptions in there Kenny. Hopefully you fully understand the modular platform flaws. Brand aside, when you look the same as everyone else price is all that matters. This is a tried and true industry reality when it comes to VOLUME. Tag will sell x number of units, and tracking the sales of things for as long as I have makes it very easy to know how many they will actually sell. I have no problem with the product, i’ve seen it and its nice but Tag’s core customer is not the one for this product…
Also how many Vertu phones do you believe were actually sold? Answer, not that many. Apple has over 90% share of phones that cost over $600 wholesale.. You have to look at things that move in volume as that is what makes a market.
1- Ben there is no flaw in modular platform, each platform have their own strength and weakness that can be of a great benefit to those that know how to take advantage of it.
The low number of Android phone sold by Vertu, is precisely why they are a brand of high-end luxury, which is essentially defined by the unique know-how, hand’s craftsmanship of their product from very rare material, High quality and on demand support, after-sales warranty lifetime service , upscale boutiques, strong brand and Low number to make their product exclusive only to the most fortunate among us, these are the reason why one single Android Vertu phone can cost more than hundred iPhone 6S.
Mark my word, it wont be long before you start seeing luxury Android phone along with luxury android smartwatch, sell exclusively in upscale boutiques of this High end watch maker and luxury brand.
Apple is not not a Luxury Brand, they are a High Volume trusted brand that anyone with a job can afford.
I don’t disagree you will see high-end luxury android phones and watches. Little known fact in parts of UAE and Saudi Arabia, Rolex sells an Android phone. My point is they wont’ sell in volume, thus are not mass market. Which means I care about it less..
It will not be in high volume sales, if you take into account only one or two luxury brand selling Luxury Android Phone in small volume but when it gets popular, and suddenly it is thousands or two thousands luxury brand company selling high-end luxury android phone and smartwatch exclusively in their upscale boutiques with all the prestige and support that come with the idea of puting a luxury Vertu Phone on a table during thanks giving diner, it will not be long before they take a huge chunk of the value and prestige out of Apple brand that need to sell in huge volume to growth, including some of their customers, while turning them into the Samsung of today, this is exacly how it started during the 80s against digital watch and Handbags it was only Tag Heur selling in extremely low volume that bring all the other to the market to the point of completly taking of it
it will be foolish to think that those Luxury brand wont try to go after Apple Lunch and just stay there doing nothing while Apple is trying to take their customer away from them or disrupt their business when they have enough brand power to turn the market upside down and put Apple back to the Samsung statu
if you were a millionnair and want to impress someone will you buy him an IPhone or a Luxury Android Phone from Vertu?
Wow, I have to say this is a shocking perspective. I can’t tell you how much I disagree with how you think this plays out. I’ve studied this market for over 15 years and your position is exceptionally difficult to justify given historic evidence across many vectors of this industry and consumer tech.
you can disagree Ben since this kind of thinking goes against your own, but the thing is that were moving to a fully digital world where nearly everything will be digitalize though the cloud, there is no historical precedent for this.
The second aspect is that people talk about Apple going to disrupt High End Luxury company as if they were a bunch of chicken poop with no ability to respond, when in fact all these luxury company combine with a strong partnership with Google and Intel are better equiped to disrupt Apple in the high-end smartphone and Smartwatch market than any Samsung of the world.
also Phone and SmartWash are perfect market for Luxury Brand. Because The market is extremely Huge and close to saturation while extremely profitable, the value of phone and smartwatch is extremely significant to most people, the level of differentiation and customization are very low and customer support, prestige, and luxury culture are underdeveloped
why would Tag Heuer stop at just making a Smartwatch when the same customer also want a Smartphone and also happened to use Google services a lot. why would all these luxury company stay there doing nothing in this new digital world when they have everything it take to sell a Luxury Phone and Smartwatch to their lifetime customer to replace their IPhone and Apple Watch to make a lot of money betting in the future of the connected world.
While we both have a bias, I think sometimes your heavy anti-Apple bias gets in the way of sound analysis. I understand it’s your opinion and your are entitled to it, but as I said we have a great deal of evidence about what happens in modular platforms. Cloud doesn’t change that even within cloud computing future we are likely to see fragmentation around consumer cloud platforms. Likely around AI, and again the hardware plays a more important role in all of this, even in a cloud based world than many appreciate.
What does or doesn’t happen in luxury is a complete different subject, since that is a very small market. I’m more interested in talking about what’s empowering millions/billions of people vs. what is empowering thousands..
there is nothing anti Apple about my point just as there is nothing anti Android or anti Tag Heuer or anti Switch watch maker about your article, my opinion are based on market dynamic and historical facts.
History has shown us that everytime a market as significant and disrupting as the Mobile and connected computer become saturated, it will unbundle into many nich that serve different purpose beyond the software code and the hardware box. that was the case with watch, Handbag, car, electronic, and even Pen and wallet etc.
no single company has ever dominated the High End of a significant market and making all the money alone forever otherwise show me your evidence.
i am not saying that Apple will be death quite the contrary, while i am saying is that since computer are moving everwhere and to the High End Luxury Product, those existing luxury company have the advantage of exisitng customer relationship, positioning and culture and thier impact on Apple might not come from only one of them but from thousand of them.
they do not need to take all the High End customer from the Apple, only 2% and all the publicity and envi that will come from that will be enough to impact Apple in the High End while other Android Phone at the mig range with price just as it’s the case with Samsung as we speak
Re-read my article on un-charted territory. Your anticipating a cyclicality that is not going to come because that cyclicality did not and does not happen in consumer markets. The dynamic you are talking about is unique to enterprise or commercial markets not consumer ones.
so according to your analysis all of those Luxury Watch maker will just sitting idle doing nothing while Apple is selling Gold watches to their customer and destroying their business simply because it’s Apple?
the dynamic i’m talking about have nothing to do with business, it is about the consumer market, of almost any category such as automobile or any other important one
Again they sell in small volume so I’m not worried about them. The current luxury players can sell thousands of smart watches per year. I’m not actually sold there is a big smart watch opportunity to begin with so this whole point is moot.
As I said, I’m interested in what moves in volume and what moves a market and consumer capabilities forward. I’m much more interested in what Android smart watch vendors can do sub $200 than >$1000
the used to sell analogue watch in extremely small volume as well, so you think is it impossible for them to created multiple category for different type of volume as they did with all the other product?
there are different segment within the High End Luxury market, Tag Heuer is not the same category or doesn’t sell at the same volume as Rolex or Cartier, i find that bizarre for you to think that these company are incapable of creating a category within their brand to sell in a million if the market or their survival depend on it
Maybe someday, I never said never, I just said that day is not today in this article. The market is not mature, Tag’s audience wants analog not digital, etc.. Hence why I said at the very beginning of this article there are two realities. That of today and that of tomorrow… Your focusing more on tomorrow and I focused more on today.
except that tomorrow can comes a lot sooner than you think.
if you don’t believe me ask Nokia and Blackberry,
You call that ‘heavy’? Ha! 😉