Swiss watchmaker TAG Heuer (TAG) is getting on the smartwatch bandwagon, possibly in a big way. Part of the luxury conglomerate LVMH, TAG is working on making an Intel-powered smartwatch that also includes a mechanical movement.
TAG has not yet announced specifics of its smartwatch or shown the device to reporters. This was a preemptive announcement ahead of the release of Apple Watch, not a product announcement. The company said it wouldn't ship a product until late 2015 at the earliest.
To better understand this story, let's meet the players involved. TAG is perceived by many to be a luxury watch brand, though the company competes near the entry-level of that market. TAG models range from a several hundred dollars US to a few thousand dollars.
TAG Heuer's Flagship Carrera, Which Starts at About $2,000
Other LVMH watch brands include Bvlgari, Hublot, and Zenith. The way the current luxury watch market works, umbrella corporations like LVMH or Swatch own a variety of brands and position each one to occupy different price ranges. Bvlgari competes roughly in the $2,000-$10,000 range, while Hublot and Zenith (unrelated to the electronics brand of the same name) overlap in the $6,000 to $100,000-plus range.
Note that the Hublot and Zenith lines start higher than most predictions place Apple's most expensive Apple Watch, the gold and rose gold Apple Watch Edition. Informed speculation and leaks have placed those models in the $5,000 range.
TAG is LVMH's largest brand by volume, and newly instated head watch person Jean-Claude Biver—LVMH owns many other luxury brands that aren't in the watch business—has been repositioning the brand to have a broader appeal (meaning cheaper watches).
Jean-Claude Biver - Head of LVMH's Watch Brands
Source: TAG Heuer
You might remember Mr. Biver as the Swiss watch guy who, just four months ago, dismissed Apple Watch as being "too feminine."
"This watch has no sex appeal," Messr. Biver said in September. "It's too feminine and looks too much like the smartwatches already on the market. To be totally honest, it looks like it was designed by a student in their first trimester."
He also indicated at the time that he was interested in making a smartwatch, but only if he could do something that didn't follow in Apple's or Google's footsteps. It appears that he put those thoughts into motion back then, as well, because he told reporters TAG has been working on a smartwatch for four months.
Next: Apple Watch at the Nexus of Jewelry, Technology, Health and Fitness
Page 2 - Apple Watch at the Nexus of Jewelry, Technology, Health and Fitness
Messr. Biver has a point about Apple Watch—sort of. I personally reject the "feminine" comment, but the Apple Watch unveiled by Apple in September isn't likely to stand the test of time the way luxury mechanical watches can and do. But that's because Apple isn't competing in the mechanical watch space, something that may be difficult for someone in that space to grasp.
Instead, Apple Watch is competing at the nexus of jewelry, technology, and health and fitness. This is a new market segment, one where no other electronics or computer company has tread, and one the luxury watch market did not and could not have even conceived.
Which is why Apple Watch is likely to succeed when it gets released in "early 2015," and it's why Apple is going to usher new generations to a place where they consider wristtop computing a must-have.
At the same time, however, the luxury watch market will continue, and just as Apple is getting new people to consider the wrist, Apple will also cause luxury watch owners to reconsider the wrist.
That's where LVMH and its TAG brand could capitalize on this new nexus of jewelry, technology, and health and fitness. The combination of a mechanical movement with electronic sensors—and maybe a display to augment the mechanical face of the watch—could really resonate with watch enthusiasts.
It's something that an upstart company called Kairos has approached by developing a smart watchband that can be used with mechanical watches. A kickstarter campaign to fund Kairos has raised more than $41,500 out of a $50,000 goal with two weeks to go—my point being that there is interest in this hybrid mechanical/smartwatch approach.
Kairos T-Band OD
Apple's ripple effect with Apple Watch is just beginning to be felt. LVMH is a smart company that has weathered many ups and downs in the watch market, and Swatch is an even larger watch company that has been on the same roller coaster ride for even longer.
You can be sure that if LVMH is working on a hybrid smartwatch, Swatch is doing the same. You can also be sure that if buyers are interested in this approach, the technology will percolate upward to encompass brands higher up in the luxury watch food chain.
All because of Apple Watch.