Apple releases the most sexy smartwatch on the market. Now the wristwatch industry has to rethink itself in a brave new world. Winners. Losers, and what they can do to save themselves.
I was chatting with designer Jeff Berghoff in the wake of Apple’s announcement of the iPhone 6 and the Apple watch. Like me, Jeff is a watch guy and he’s an Apple guy. During the conversation, I was obsessed with my previous blog series on the iWatch Apple Watch and how all my predictions were correct. As our conversation settled (translated: when I stopped talking), he asked a poignant question: What does the Apple Watch do to other watch makers?
There is an interesting story going on here: pricing strategy, product differentiation, brand loyalty, technology, and design. So let’s get started.
Rolex, Patek, Tag Heuer, et al. #WINNING
These watchmakers are in a different league than anyone else. These are handmade watches with stunning mechanical components that run perpetually without a battery. The companies have wonderful backstories and a crazy-cool heritage. Plus the vintage set is growing in value every day. If anything, the Apple Watch will bring more attention to these watches because a few key details of the Apple Watch are inspired by vintage timepieces.
What to do: Nothing. Just keep doing what you do. And Tudor, send me a Heritage Black Bay.
If my memory serves me correctly, Fossil was cool in the early ’90s. I went to high school and then off to college. Got a job. I forgot all about Fossil until about 2012 when I walked into their store at the mall. Their interior space was cool and they had an interesting variety of watches, and their bags and carry goods were on-trend. Could it be that Fossil was having a revival? They had my attention.
That was until earlier this week when I walked through one of their stores to buy a watch for my wife’s birthday. The Apple Watch had been announced that morning but it’s not coming out until 2015. So I had all the motivation to buy a watch on that day but—just like that–everything in the store seemed like a joke. Charging $150 for a women’s watch made of non-precious metals? Now that’s just silly when you can spend $350 for an Apple Watch. (Think back to 2007: Get a Motorola Razr or pay a little more and get Apple’s new iPhone?)
In the coming years, Fossil will be in a difficult place where they have to see what people are really willing to spend for their product. Especially as Apple lowers their prices for the Watch to bring in new customers. It gets even worse for Fossil when you find out that they manufacture watches for Burberry, Diesel, Coach, Marc Jacobs, and other labels. This is a real test of the value of a brand. And, just like Fossil, these fashion co’s are in a bad place. Not only is an Apple Watch very capable, but it also has a substantive style that could make “fashion watches” look silly. (Irony: fossils –> dinosaurs –> extinct.)
What to do: Stop working on your 2020 General Plan. Instead, develop a well-storied brand completely detached from Fossil. Focus on quality, timeless design, and heritage. Charge a lot of money so that you are taken seriously. Oh, wait! That’s what the Fossil co-Founder did in 2011–>> Shinola®.
Shinola is a fun mash-up of current trends: rebuilding the city of Detroit, the Maker ethos, nifty cycles, leather goods, expensive things. They even commandeered a brand name with heritage: SHINOLA. They are the underdog with lots of style.
Except for the fact that the company is owned/founded by a dude who started Fossil. Never mind that their watch parts are made in Switzerland by an affiliate corporation. And that “Made in Detroit” means “put together by 40 people in Detroit”. Also, try not to grimace that you can pay upwards of $1500 for a battery-powered quartz watch when you could get a legit mechanical watch for the same price.** But Shinola is cool, bro.
All skepticism aside, Shinola is a great brand. If they stay the course, they’ll have stores in most high-end malls within 5 years. They’ll take the spaces left vacant by Fossil (FOSL).
What to do: Shinola will need to weather the social media revolt from the hipsters who are a bit embarrassed when they became fanboys a homegrown company that was really Big Corp all along. So Shinola, make good on your promise of rebuilding Detroit. Showcase your designers. Make a genuine story. Craft exceptional watches. Move deliberately towards making mechanical watches, but at a lower price point than the Richy Rich Rolexes.
Nixon is a fantastic brand. I’ve been to their HQ in Encinitas and I dig it. I’ve recently learned that the Nixon founders are back to steer the company, which could strengthen the brand integrity. Founders coming home can be a good thing (Apple’s Steve Jobs in 1996, Starbuck’s Howard Schultz in 2008) but it doesn’t always work out so well. If American Apparel brought back weirdo-CEO Dov Charney, I would short the hell out of that stock (APP).
Where was I? Nixon. Right, Nixon! Nixon is a cool company because they have a strong connection with professional surfing, skateboarding, and snowboarding. Take a look at their team pros and ambassadors pages, and you see quickly that they have a dream team of cool kids attached to their products. (Including my amiable neighbor Josh Kerr.)
What to do: Keep the watches, but don’t waste any time trying to keep up with the Apple Watch. Too much R&D and you will never catch up. Shift the primary focus towards backpacks, bags, sunglasses, boarding gear, and iPhone/iPad accessories. Don’t be afraid to introduce Nixon straps for the Apple Watch. The strap was what first defined Nixon apart from the rest can make you famous all over again.
The Lesson Here: Pay Attention
The Apple Watch may be new to most Americans, but the idea of a legit smart watch has been brewing in the tech community for a few years now. If you work in this industry, you’ve known that a robust smart watch would significantly disrupt your world. You can ignore the trend (Fossil), or you can watch it closely and pivot in new directions (Nixon, Shinola). So the lesson here is to pay attention to trends and create a Plan B. Do it quickly because time is not on your side. (Pun intended.)
**Note: Shinola kindly contacted me with the following via Twitter: