Apple (AAPL, Financial) was not the first to launch a smartphone or a tablet. It’s not the first to introduce a smartwatch, either. However, the tech giant has a rich history of offering products that have always been class apart from its contemporaries – completely transforming the way the industry perceived the product. The Apple Watch is going on sale next month and Apple fans are extremely excited about it. The market is already swamped with smart watch maker, but none has seen success.
Under this backdrop, will the new product line be able to bring success to Apple the way iPhone and iPad brought by revolutionizing the smart phone and tablet space? Can the Apple Watch take the company to the next level or will it just become one of the complementary product lines of the Cupertino giant such as the Apple TV? Let’s find out.
Impact on existing SW players
The Apple Watch is priced between $350 and $17,000. Watches in the higher range are targeted toward those who spend thousands of dollars on luxury items that serve as a status symbol. The functionality of these high end models wouldn’t be much different from the basic one other than the fact that the costly versions would be made of yellow gold or rose gold. With the Apple Watch due next month, should Samsung worry about its market share?
Samsung (SSNLF, Financial) launched the Galaxy Gear in 2013 and has introduced several successors thereon. However the devices haven’t gained much popularity or success the way Samsung had expected. Last year Samsung was the lead smart watch seller as it sold 1.2 million watches, followed by Pebble that sold 0.7 million units. The reason why Samsung topped the list is that there aren’t many players operating on such a big scale.
Samsung targets Android customers. And though Samsung has been struggling in the smart phone market in recent times after the release of iPhone 6 and iPhone 6 Plus, the South Korean technology giant has seen an improvement in the high end smartphone market. These high end users could look to buy Galaxy Gear to match Apple users’ highly anticipated Watch. But Apple’s got a strategy up its sleeves.
Apple is said to be planning a one of its kind trade-in deal by providing gift cards to Android users who swap their existing devices for new iPhones. The deal is expected to start in the coming weeks, according to 9to5mac. Not only will this boost iPhone sales, but it would also help the company increase its customer base for the Apple Watch. This is one way of drawing Android customers into the Apple ecosystem.
Impact on luxury watch brands
What response Apple Watch would receive from people is difficult to predict. Even if the device is a hit among consumers, it should not come at the cost of Tag Heuer or Rolex. The reason is that an Apple Watch may look like a watch, but it’s like sporting a mini computer on the wrist. On the contrary, people who spend on luxury watches like Tag Heuer spend that amount of money for the craftsmanship and esteem these watches offer to the owner. Buyers would love to use these watches for years; however a smart watch won’t last as long.
Nevertheless, Apple’s high-end watches seem to be worrying Tag Heuer because of which the French brand is planning to release a smart watch later this year in collaboration with Google (GOOG, Financial) and Intel (INTC, Financial). Though company CEO Jean-Claude Biver declined to comment on the price range of the watch, but said that it would be the first ever luxury smart watch with Android operating system. VP of Intel’s new devices unit Michael Bell believes that wearable device is going to be the next big thing. Ben Wood of CCS Insight said “With Apple Watch hitting the market it’s no longer viable for Swiss watchmakers to bury their heads in the sand. Now Tag Heuer has signaled its intention to enter the smart watch market we are certain others will follow.” Gucci said that it would make a smart band that would allow users to make phone calls, text messages, send and receive emails and have music. However, the Italian luxury house did not give details regarding the price or time of launch.
The watch industry was initially skeptical about Apple Watch, but now it’s racing to catch up with the Cupertino behemoth. How the Apple Watch would contribute toward the company’s top and bottom lines will get clearer only after the device starts selling in April.
