What it is: Sales of Swatches and luxury watches have been declining for the past year.
A long time ago, everyone had landline telephones. Eventually as mobile phones became popular, cheaper, and more reliable, people started dropping their landlines. Why bother paying for a landline that could only work if you were near the phone when someone called?
Mobile phones are simply more flexible and convenient than landlines to the point where landlines can’t compete any more. That’s because newer technology offers so many advantages than existing technology couldn’t match.
So when Apple introduced the Apple Watch, traditional watch manufacturers boasted that it wouldn’t hurt their sales. Given a choice between buying an Apple Watch or a traditional watch, more people seem to be buying smart watches like the Apple Watch and ignoring traditional watches. For the past eleven months, sales of Swiss watches has declined while Swatch warned that profits would plummet by 50%.
Why is this happening? Did people suddenly decide to stop buying watches? Or did the Apple Watch and the rise of smart watches help kill sales of traditional watches?
Given a choice between a watch that does nothing but tell time, or a smart watch that can do so much more, which option do you think offers the most features? Dedicated devices of all kinds are on the way out. Look at how the iPod went from a trend setting product to an afterthought. That’s because few people need a dedicated music player when they have one built-in to every smartphone in the world.
While you can buy a watch and a fitness tracker, it’s far less hassle to buy a smart watch instead. The smart watch can tell time like a regular watch and offers fitness tracking features as well. So sales of watches and fitness trackers are down.
Smartphones can perform common browsing and email functions that used to require a PC, so it’s no surprise that PC sales keep dropping as well. There’s little hope that PC sales will magically rebound any more than there’s hope that iPod sales will suddenly reverse their downward trend and start rising again.
PCs, iPods, landline telephones, and ordinary watches simply can’t compete. They may be cheaper, but they’re not more versatile. Someone might buy a luxury watch just as a piece of jewelry, but it’s still far more limited in its functions than a smart watch, and you can still buy luxury smart watches if you want a piece of jewelry and status symbol on your wrist.
Swatch and the rest of the Swiss watch industry have nowhere to go but down. They might as well join Blackberry and Nokia as shells of their former selves because their market is gone for good.
Does anyone think the Yellow Pages paper directory can compete with Google’s search engine? Does anyone think that traditional watch manufacturers can compete against smart watch manufacturers? Does anyone think horse carriage manufacturers can compete against automobile manufacturers?
The traditional watch industry is as obsolete as the typewriter industry. Just as some people still buy typewriters, some people will still buy traditional watches. The difference is that the number of people buying typewriters or traditional watches will be much less than the number of people buying word processors or smart watches.
Despite critics claiming the Apple Watch is a flop, the Apple Watch has helped define the smart watch category to the point where it’s already killing the previous leaders in the watch industry. The test of true innovation is when a product kills a long-standing, existing product like the iPhone killed Blackberry and Nokia smartphones and the iPad killed the netbook market.
Today, the Apple Watch is killing the traditional watch industry and they have no hope of recovery. It’s easy to predict the future when you’re able to remember history. For people in the watch industry, be prepared to see further layoffs and cutbacks. For people in the smart watch industry, be ready for continual growth over the next few years as smart watches become more commonplace and more versatile.
The demise of traditional watch manufacturers is evidence that the Apple Watch is more successful than critics might believe. Then again, critics have rarely been right when they choose to ignore history and facts.