Apple Watch is hurting the competition — but the competition ain’t Android Wear or Pebble:
Analysts predicted last year that the tech-savvy watch, which launched in April at a starting price of $349, would crush watch sales for companies like Michael Kors that sell timepieces in the price range of $300 to $500.
Those predictions might already be coming true.
Michael Kors reported a 5.8% decline in same-store sales for its fourth quarter on Wednesday, including a 6.7% drop in North America. Analysts had been expecting a same-store sales increase in North America — the company’s biggest market — of 3%.
In a research note last fall, Barclays analysts said they were “increasingly concerned” about Fossil, which makes watches for more than a dozen brands including Michael Kors, Marc by Marc Jacobs, and Burberry.
Apple’s new retailing chief, Angela Ahrendts, came to Cupertino from Burberry, and presumably knows what that kind of customer is looking for. Think of your typical Fossil-cum-Apple-Watch customer as “upscale but not too upscale.” Her hiring and the debut of Apple Watch are no coincidence.
The story goes on:
“We cannot overlook what is increasingly becoming a major disruption to the entire watch industry,” the analysts wrote. “Future innovation at Fossil …will largely be challenged by hype and innovative offerings from deep pocket technology-credible competitors such as Apple, Samsung and Motorola.”
Right now, Android Wear’s mostly oversized and geek-oriented offerings aren’t any kind of disruptive competition to Fossil, although that isn’t to say they won’t be in the future — aside from clunkiness, that LG Urbane is one handsome piece of hardware, hampered mostly by Android Wear’s weaknesses. Wear will improve and the hardware will become sleeker — but for the next year or two, there’s not much to talk about outside the Android Wear enthusiast community.
Can we learn anything then at this early stage from the Apple Watch launch and Fossil’s woes? Maybe.
The key might be found in this WSJ review of the Urbane:
The Apple Watch is, despite its many talents, a watch first and foremost. Rival Android Wear watches, which made a debut last year, are still frustrating wrist-top computers that happen to tell the time.
This isn’t an Apple vs Google fight — given time, I’m sure Android Wear will catch up, even if the target market never quite reaches the “upscale but not too upscale” crowd. Just like with smartphones, there’s plenty of room in the marketplace for both operating systems.
But we’re still in the early stages of wearable computers. Even when powered by slow CPUs and with faces that turn on only when you flick your wrist, they still have to be charged every night and require a paired smartphone (for now) to act as the real brains of the watch.
Google’s OEMs — like LG, Samsung, and Motorola — haven’t really come up with a solution to that problem. Apple’s solution was to make nice watches that also do some cool extra stuff, rather than “frustrating wrist-top computers that happen to tell the time.”
As best we know so far, Apple’s approach seems to be winning in the marketplace — at least for now. And I think I know why.
Like a lot of people, I liked wearing a watch. I miss wearing a watch, but there seems little point to it anymore when all it does is tell me the time and date — and I get those whenever I pull my phone out of my pocket. Since the smartphone, there just isn’t enough utility to make watches worth most people’s while. (One exception is beach vacations. Leave the damn phone in your room safe and strap a cheap Swatch or Casio to your wrist so you always know how long before the swim-up bar opens.)
So there are millions and millions of us who would be happy to wear a watch again — if it provided enough added utility and if it didn’t look like crap right out there on our wrists for everyone to see.
Apple nailed the second part right out of the gate with stylish gear which isn’t too bulky for most wrists. But for many people the first part is less clear.
The first generation iPod interested me — because, hey, 1,000 songs in my pocket! However, giving up MusicMatch (before it sucked) for iTunes and switching to a PowerPC Mac weren’t worth it. By the third generation, Apple had added a color screen and PC connectivity — and MusicMatch 10 was complete crap. SOLD!
Same deal with the first generation MacBook Air — underpowered and too expensive. Now prices have come down, performance is way up, and dang near every decent laptop computer looks just like a MacBook Air. (This story will repeat itself over the next two-three years with the new-and-even-tinier Retina MacBook.)
On the other hand, Apple got the price/performance matrix just right with the first-gen iPhone and the new Mac Pro — and I was a happy buyer of the first generation of both.
So while I do miss wearing a watch, I’m still not sure this first-gen Apple Watch is the device to rekindle that old love. But if shrinking sales numbers from Michael Kors are any indicator of the Watch’s utility, then it might be a little more first-gen iPhone and little less first-gen MacBook Air.