Smartwatches prepare to go it alone

A major part of the wearable tech market, sales of smartwatches invite all manner of speculation and interpretation. Not only is there little in the way of hard numbers (compounded by the fact that Apple, the market leader, keeps a lid on sales), “modem” brands, the ones that embrace innovation, promise they will drain the lifeblood from the “old players” still clinging to an outmoded technology, namely mechanical watches, that will inevitably disappear. It’s a caricatural picture, granted, as well as a cast-iron problem: there’s not enough evidence to support claims on either side of the fence. There are, however, some definite trends…

Supposing that smartwatches can be put in the same basket as mechanical watches, there’s no denying they’ve found their place in the sun in very little time. From barely a dozen models three years ago, when the genre began to emerge, more than 200 different smartwatches are now on offer, and the name on the box can just as easily be one of the electronics giants, with Apple, Samsung, Fitbit and Fossil leading the charge, as a heavyweight in “traditional” watchmaking such as TAG Heuer or Louis Vuitton (both LVMH), Montblanc (Richemont), or Frédérique Constant (Citizen). Swatch Group has yet to bring out the big guns, although after the Swatch Touch Zero One and Swatch Bellamy, the multinational is working with the Swiss Centre for Electronics and Microtechnology (CSEM) on a proprietary, Swiss-Made system – a sign it’s starting to take the matter seriously. After all, there are big bucks to be made: Canalys predicts the market will be worth US$ 10 billion by the end of the year with 28.5 million units shipped. That’s 18% up on 2016. Bank Vontobel notes the positive impact smartwatches have had for TAG Heuer: “In 2016, the brand sold 56,000 units of its Carrera Connected, launched in November 2015. This represents almost 10% of the brand’s total volume sales, and is one of the reasons it gained market share in 2016.”

Programmed success

Now the brand is taking things to the next level. Earlier in the year, it presented its second-generation smartwatch, the TAG Heuer Connected 45, which rolls off its very own production line in Switzerland and as such qualifies for the Swiss-Made label. Speaking at the unveiling, President of the LVMH Watch Division and TAG Heuer CEO Jean-Claude Biver said the objective was to triple smartwatch sales to 150,000 units in 2017. When the subject came up again a few months later, the same Jean-Claude Biver was suddenly as tight-lipped as an Apple exec, stating only that it has been the brand’s best-selling product since its launch in March. From a man who is generally forthcoming, this coyness is down to what will be a gamechanger in the smartwatch segment. Indeed, the word online is that the next Apple Watch will function without the aid of an iPhone. Freeing a smartwatch from its reliance on a smartphone is certainly a giant step forward; the one everyone has been waiting for, before deciding whether this electronic “assistant” has a real future.

One thing is for sure: Jean-Claude Biver isn’t about to miss out on the party, particularly now that TAG Heuer has an office with a dozen engineers in Palo Alto. “When in the coming months Apple or we at TAG Heuer launch a 4G LTE watch, you can bet it will be more successful than existing smartwatches,” Biver recently declared in the Swiss business magazine Bilanz. “How successful will depend on various factors such as battery life, the size of the watch, and the quality of communications. All these questions need answers. In the medium term, though, the solution clearly lies with a watch that is independent of a phone.” TAG Heuer’s CEO hasn’t yet given a specific timeframe: “There won’t be long between Apple’s launch and ours. Maybe our product will debut at the same time, even a few weeks before. But I can’t say exactly when right now, because we don’t know yet.” In the smartwatch segment, everything is still to play for.