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Apple, the world’s number-two “watchmaker”
Economy

Apple, the world’s number-two “watchmaker”

Wednesday, 14 September 2016
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Christophe Roulet
Editor-in-chief, HH Journal

“The desire to learn is the key to understanding.”

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4 min read

Speaking at its recent conference, CEO Tim Cook ranked Apple second in worldwide watch sales, just behind Rolex. Although the event revealed little in the way of figures, one thing is for sure: the invasion of the smartwatch has yet to come.

Just over a year ago, in spring 2015 to be exact, the “most perfect watch ever” hit the markets, with the promise that this would be the twenty-first-century technology revolution, a development as game-changing as its smartphone in 2007. Given that more than a billion iPhones have been sold worldwide, this was fighting talk. So what’s the picture seventeen months down the line in San Francisco, where Chief Executive Tim Cook rolled out the brand’s latest products, including the new version of the Apple Watch?

Following an information blackout of several months – better keep quiet than admit failure? – Tim Cook finally decided to lift a corner of the veil on Apple’s adventures in watchland. No figures were given, which didn’t prevent Cook from positioning Apple second on the global watch market. Only Vontobel Bank produces this type of ranking, which the Californian company presumably used as a reference (see chart). If Tim Cook can be believed, Apple sits somewhere between the CHF 4.9 billion made by Rolex in 2015 and Fossil’s CHF 2.3 billion. Vontobel analyst René Weber puts the figure at CHF 4.5 billion. Considering Apple’s gargantuan sales – the group made $234 billion in 2015 – the Apple Watch’s midget-size share of revenue (1.9%) could be why the brand, not usually one to downplay its achievements, has been uncommonly quiet. Still, the fact remains that the company is already sitting pretty, having served itself an 11% slice of the global watch manufacturing pie, which Vontobel estimates at almost CHF 40 billion.

© Re Up
The errors of its ways

What can we conclude? Given the hordes of fans who are always willing to pay over the odds for each new bite at the apple, it would have been astonishing for the Cupertino firm not to ride roughshod over the competition. Particularly as it has intelligent marketing down to a tee. A year and a half after the Apple Watch’s launch, virtually half the connected watch market is in the hands of Apple, the world’s largest company with a market cap of $564 billion. Samsung, whose Gear watches certainly stand comparison, trails well behind, accounting for a fifth of world sales. There is, however, a cloud to this silver lining. Sidestepping the debate as to whether the Apple Watch truly is a watch, or whether connected watches currently serve any real purpose, given their dependency on a smartphone, there’s no denying that the smartwatch invasion simply hasn’t happened. Anything but, according to Bloomberg which reports a 55% decline in Apple Watch sales in the second quarter 2016.

The Apple Watch 2
The Apple Watch 2 unveiled par Jeff Williams

Are teething troubles to blame? The Apple Watch Series 2 certainly sets out to correct its predecessor’s shortcomings. The new model features a faster processor, brighter display and built-in GPS, an improvement that should appeal to runners who don’t want to take along their smartphone; Apple is also making an Apple Watch Nike+ especially for them. The changes Apple really wants us to notice, however, concern battery life, which the firm says is significantly better than the previous 12 hours maximum, and water-resistance, now 50 metres. Given that doing the dishes with a 50-metre rating is already ill-advised, only experience will tell if Apple’s boasting is anything less than watertight. As far as looks go, the new version has dropped the gold case option, a wise decision considering that like all consumer electronics, the Apple Watch comes with planned obsolescence. So out goes gold and in comes ceramic, as well as a continued partnership with Hermès for straps. The new range is priced from €419 for aluminium or steel and from €1,449 for ceramic.

Will these new models finally convince Apple to drop the comparisons with firms which have decades of experience developing timepieces that couldn’t be further removed from the Apple Watch? Then we’ll see how much of a revolution this really is.

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