What will be the impact of the smartwatch on the traditional timepiece?

Enrique Dans
Aug 14, 2015 · 4 min read

As the debate continues over whether the Apple Watch is a success or a failure in terms of expectations, a couple of things have become clear: the first is that despite criticism that it leaves much to be desired in terms of usability, battery life, and other aspects, users seem very pleased with it. The second thing is that, as has been expected for a couple of months, the sales in the traditional watch market have fallen sharply, a fact that some of those affected now admit.

We’re talking here about an 11 percent fall off in economic terms, and 14 percent in units sold, the biggest drop since 2008, and that affects all prices (the biggest fall is in the $100 to $150 range), and that despite finding ourselves still at the beginning of the time series, it could point to a difficult future for the category. That said, this could all be about timing: the launch came when many people who were thinking about buying a watch chose an Apple Watch at a time when it was at the height of its popularity, although as happens with all launches, it will be difficult to sustain initial sales. In any even, despite the lack of transparency in providing figures, we are surely talking about sales of more than two million Apple Watches in the US market alone in the month of June, compared to the more than 900,000 that the traditional watch industry managed in the same period and in the same market.

Are we witnessing a technology substitution process? That’s not such an easy question to answer: on the one hand, smartwatches are highly fashionable, and are being worn in the same way that more upmarket traditional timepieces have: “I’m not wearing this to tell the time, but to show how wealthy and stylish I am.” Obsolescence also seems to be a factor: just about any of the 10 watches that supposedly changed the industry can still be worn. Or you can spend a minimum of $350 and a maximum of $17,000 on a watch that your children are never going to wear, given the rapid pace of technological change.

And of course there are other factors, some of them quite complex. As smartwatch technology currently stands, we are talking about an object that we can wear a lot of the time, but not all the time: if you like messing about in the water, you’ll want to take it off. And if, like me, you like diving and want to wear something that will tell you how long you’ve been in the water, then an Apple Watch is of no use. That said, it’s perfectly likely that technology will come up with a waterproof, more resilient version in the not too distant future.

At the same time, smartwatches tend to be related to an activity that appeals to more and more of us: the quantified self. Once you have started monitoring your heart rate and other vital signs, as well as measuring how much exercise you do, there is no going back: checking that information becomes part of your daily routine. What’s more, smartwatches are becoming more sophisticated, offering more features and greater accuracy, meaning that some of us will be hooked for life.

In the case of Fitbit, which wants to convert the smartwatch into something that companies can use to promote more healthy living habits among employees, it is clear: the smartwatch as something that we wear at all times, as something that can permanently control our activities. A woman who recently reported having been raped was accused of giving false evidence based on information available from the Fitbit she was wearing at the time of the supposed attack.

Leaving aside more outlandish ideas, the most likely direction the market is headed is either for traditional watches to incorporate smartwatch features, or for smartwatches to toughen up. Google’s Android Watch is based on the same strategy as Android itself: offer the industry, whether consumer electronics or classic watches, a platform it can use to innovate.

It’s also possible that cheaper smartwatches become available, along the lines of the Swatch, or that more sophisticated features will make the smartwatch more ubiquitous.

But there is little reason to believe that the arrival of the smartwatch will necessarily be good news for the traditional watch industry: surely only a few of the more traditionally minded in that sector think people will buy more watches thanks to the appearance of the Apple Watch. We’re probably going to see some convergence from either end of the market, but quite where this sector is going is still far from clear.

(En español, aquí)

Enrique Dans

Written by

Professor of Innovation at IE Business School and blogger at enriquedans.com

Enrique Dans

On the effects of technology innovation on people, companies and society (writing in Spanish at enriquedans.com since 2003)

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