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Smartwatch Wars : Disruption is at hand in 2015
I won’t deny the fact that I like gadgets from Apple, and have been following up on the updates about their much anticipated smartwatch - Apple Watch (which is slated to go on sale from April 24). The thing that intrigued me more than the updates on Apple Watch was the flurry of renowned watch brands like Tissot and TAG Heuer announcing their own versions of smartwatches in the past couple of weeks. It is natural for the likes of Samsung and Motorola, who are direct competitors to Apple, be in the arena of smartwatches. However, seeing the legendary luxury watch brands jump on to the smartwatches bandwagon appears as if these luxury watch brands deem Apple Watch to be a threat!
We are all living in the age of ‘disruptive innovation’, where an innovation carves a market for itself by finding a new customer base and displaces an existing market. The likes of Uber and Ola cab-rental services are examples of disruptive innovations where they introduced a non-traditional way of functioning with no hassles of maintaining a cab fleet or any fixed assets.
Likewise, the wristwatch segment has been subjected to some really interesting disruptive innovations in the past few years. Couple of years back, Pebble released a smartwatch that communicated with the user’s smartphone via Bluetooth and displayed notifications about emails and text messages, allowed controlling music and tracking fitness, etc. And that had set the trend for devices not working in a stand-alone but inter-connected way, communicating with other devices, particularly smartphones. Now you don’t have to flick out your smartphone from the pocket each time it buzzes; you get notified on your smartwatch about the incoming call or text and you can take the appropriate action right from your watch.
I don’t see smartwatches as a fad that will fizzle out soon because it is a sensible extension of a device which has become an integral part of our connected lives – a smartphone. Smartwatches will not be an additional device that we will have to carry, but ultimately will be a natural replacement to traditional wristwatches. Smartwatches have graduated from gadget enthusiasts’ market to become more mainstream, with both Google and Apple launching their own versions of smartwatches. Till now these smartwatches were in the price segment of USD 150 – USD 350. Much under the price segment of luxury watches like Tissot, Rolex, etc. Whereas Apple Watch will start at a price point of around USD 350, and will go up to USD 12000 for its 18-karat rose-gold edition. The foray of Apple Watch entering into the price segment where the luxury brands operate is a worrying factor for these brands. They cannot afford to ignore the smartwatch trend. If someone is buying an Apple Watch priced at USD 1000 or more, it will definitely be replacing a luxury wristwatch, as no one will wear two wristwatches.
For industry trend analysis I often cite the example of Kodak, a renowned film-based camera manufacturer which didn’t gauge the digital photography market well and was beaten by Canon and Nikon. In the same vein, a threat looms over the traditional wristwatch manufacturers if they ignore the trend of smartwatches. Tissot and TAG Heuer are taking the right measure by being cognizant of disruptive innovation brought by smartwatches which can negatively impact their market share.
It pays more to take risks rather than becoming a sitting duck to a trend that is going to impact your business.
