Why Apple May Be a Threat to Rolex

Analysts are sure: The new Apple Watch, which carries an opening price point of $349, will mostly hurt the low-end watch business. Others are certain it will hurt the mid-range. The only segment most everyone agrees is safe is the high end. The best brands have a fervid fan base that rivals Apple’s—and Apple would never release a product that breathes their rarified air, or carries their rarified price tags. 

Or would it? That $349 price point is for the introductory Apple Watch Sport. The other models—the standard Watch and Edition—will surely be pricier. As Vox.com put it: “The launch of three distinct collections—sport, normal, and luxury—involves taking aim at different demographics, a tried-and-true fashion brand move. 

It’s the top model—the Apple Watch Edition—that should most intrigue, and maybe unsettle, our business. It comes with its own resting case, which Apple says “is crafted from 18-karat gold that our metallurgists have developed to be up to twice as hard as standard gold.” The case also doubles as a charger, so “those willing to splurge on a premium model won’t just be plugging their watch into a MagSafe adapter on their nightstand like the rest of us,” writes one blogger

A “jewelry contact familiar with the matter” told TechCrunch that the Edition will retail for $1,200. But watch blogger Ariel Adams as well as Apple blogger John Gruber think it may set you back anywhere from $5,000 to $10,000—or more. (The jeweler-readers of JCK are welcome to supply their own estimates.)  

Assuming we are talking about a price point over $1,000—maybe way over—that raises another issue: Where will it be sold? Apple has stores, but it could face the same problem jewelers do: As much as it likes the public to “play” with its product, you run a huge security risk leaving out something so small and so valuable. A fancy gold watch also doesn’t seem like the kind of item you’d purchase at an Apple store—and certainly not a Best Buy. That is why some, including Adams, predict the top model might be sold in upscale department stores and possibly even jewelry stores. The hiring of TAG Heuer’s former sales director now makes much more sense.

Or it could change its stores to fit the product: “Don’t be surprised if the company rolls out a unique selling environment that lives up to the Apple Watch Edition product—maybe a luxury Apple Watch shop-in-shop or stand-alone unique high-end tailored to support the new product,” writes Business of Fashion. Its retail operation is currently headed by Angela Ahrendts, former CEO of Burberry. Her hiring now makes sense, too.

All this marks something of a shift. Apple has always been known for its clean, simple, uncluttered design aesthetic. But for a tech object that doubles as an accessory, a nice-looking device might not be enough. At the Sept. 9 keynote, Apple execs proclaimed their new creation “Apple’s most personal product ever”—which means it’s “as much about personal expression as about functionality,” according to design director Jony Ive. 

In just about every article on wearables, manufacturers talk about how they must be stylish. And yet most of them, including the smartwatches, have been fashion failures. Even with the best intentions, what do shlubby tech geeks know about watch design?

Prior to the watch launch, Apple did a mini-raid on the fashion world. It now boasts talent from Burberry, TAG Heuer, and Yves St. Laurent. Just last month, it hired noted designer Marc Newson, who has worked on watches.

And while opinions differ, many think that Apple succeeded in its quest for a stylish tech gizmo. “Apple got more details right on their watch than the vast majority of Swiss and Asian brands do with similarly priced watches, and those details add up to a really impressive piece of design,” raved watch blog Hodinkee, which was particularly impressed how it “nailed” the straps.

At least one blogger sees this is a permanent shift:

Apple is not competing with Google or Microsoft any longer but with Prada, Dolce & Gabbana, Rolex, Swaro[v]ski, Tiffan[y] and the like. It’s not any longer a crusade against cumbersome technology in which geeks and technorati were supporting Apple in the fight against an evil operating system. It hasn’t been for a while now. 

Instead this is a battle against boring fashion. They want to show how technology can bring usefulness and fun into everyday lives, with style.  

To show how serious Apple is about being a fashion name, when it unveiled the Apple Watch, it invited not just tech journalists but style writers too.

This also makes business sense. Many, including me, have said it’s not clear why anyone would need the Apple Watch. And yet it is also an affordable, stylish watch, which some might buy simply because it looks good. That’s why they buy regular watches, and people don’t need them either. (Remember, this product is “as much about personal expression as functionality.”) I could even see people having a daytime Apple Watch and a dressy nighttime one. If the device gets established, the permutations are endless.

Apple has not just entered the watch business as far as product. It’s entering it as far as design—and maybe even price point. As Gruber notes, last week no Apple exec called their new baby a “smartwatch.” They called it a watch.

In fact, many think Apple is transforming into a lifestyle brand, which will bring better margins and stock valuation. Who knows where it goes from here. Will Apple exhibit at Baselworld—or the JCK show? I wouldn’t count on it. But I wouldn’t rule it out, either. 

JCK News Director