Tag CEO: Selling 5 Million Apple Watches Is 'Genius,' but Smartwatches Over $2K Have a Problem

I'll admit that I love Jean-Claude Biver, president of LVMH's watch division and CEO of Tag Heuer. He has a flare for the dramatic and always speaks his mind, even if he contradicts some past version of Jean-Claude Biver.

Jean-Claude Biver on CNBC

Jean-Claude Biver on CNBC

Monday on CNBC (video embedded at the bottom of this article), Mr. Biver said that if Apple has "only sold" 5 million Apple Watch units, that it is a phenomenal achievement, and "genius." While many outside observers were looking for sales many times that, the reality is that 5 million units are huge numbers in the watch world.

In the interview, Mr. Biver said:

You must always be concerned when a newcomer is entering into your field. How successful has Apple been? We don't know. In the beginning, they were speaking about 10 to 20 million pieces, then sometimes we say they only sold 5 million. Nevertheless, to sell 5 million watches when you have not been a watchmaker is genius. It's phenomenal.

Now how will it act on the Swiss traditional watch industry? Certainly a big competition, huge! It will be a tsunami, for me—in the price segment, between say $200 and up to eventually $2,000.

And that's when he flipped back to zero in his on again, off again affair with Apple Watch, because Mr. Biver dismissed the US$10,000 gold Apple Watch Edition. More specifically he argued that no smartwatch can compete against luxury mechanical time pieces above the $2,000 range.

"Above $2,000, the connected watch has a huge problem," he said. "There is no eternity, it means it will become obsolete and who wants to buy a $10,000 - $20,000 watch, that becomes obsolete after five or 10 years? So the eternity in a box—that's how I call a mechanical watch—it's eternal! It's like Big Ben. Big Ben is working after 150 years!"

This is the problem I've seen with Apple Watch Edition since it was announced. $10,000 isn't too much for a watch, per se. In the luxury watch market, $2,000 is a starter timepiece, while $10,000 is an intermediate step.

But that's for a device that will last and be relevant for a hundred years (with proper maintenance). Apple Watch Edition innards, on the other hand, will be outdated in three, maybe four years, and it will be obsolete in ten, at the most.

As I've noted many times, I have no doubt Apple knows what it's doing with Apple Watch Edition, and that device's role in the company's watch strategy is much more complex than merely moving units. It's real purpose is to get people to think differently about wearable computing.

With all that in mind, Mr. Biver's angle is that Apple Watch Edition won't have much of an effect on the Swiss luxury timepiece industry. I'm still not sure he's right, though; I think Apple Watch Edition and Apple Watch itself are forcing Swiss watchmakers to think differently.

We will see more and more luxury mechanical watches enter the market with some "connected" functionality. Ultimately, I think the Swiss watchmaker who can integrate smart/connected technology that doesn't get in the way of the elegance of the traditional mechanical timepiece will end up actually benefitting from Apple's presence in this market.

Until then, we can just enjoy the show as Mr. Biver flip flops from day to day on Apple Watch.

Mr. Biver's comments about Apple Watch begin with a question starting at approximately 2 minutes and 36 seconds in the clip below.