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Rolex The Apple Killer

Rolex The Apple Killer

The Apple Watch strategy has been tweaked, and much of the evidence was on stage at the September 9th event. For all the talk of the Apple Watch being a fashionable status symbol, Tim Cook and his team had to be satisfied with second place after Rolex. Apple also changed strategies, no doubt from the lessons learned in the fight against the Swiss watch manufacturer.

The bullet point features of the redesigned Apple Watch include the addition of GPS and waterproofing, both of which push the wearable closer to being a fitness and activity tracker. Of course there will be changes to the chips and the software that increase the battery life and the functionality offered by updated hardware, that’s the natural way of things, but it’s worth nothing that the attachments for the watch straps remains identical.

That’s partly common sense, but as Apple has shown in the past common sense does not always match up with Apple’s vision of the future. If something needs to change (or be removed) Apple will do that (and will likely find a financial upside while doing so). Retaining the ability to use existing Watch Bands on the new smartwatches means that the first- and third-party market for watch bands remains unaffected.

Apple has never broken out sales figures of the Apple Watch, but I assume that the cheaper Apple watch models sold far more units than the high-end luxury market Apple Watches. Even with the volume of sales at the lower end, Tim Cook’s presentation pointed out that Apple’s entrance into the match market was not a complete success.

Apple was defeated by the biggest name in the business. Rolex stood proud at number one.

But it’s what was not only missing, but removed from the Apple Watch line-up that brings Cupertino’s new timepiece strategy into focus. Apple dropped the 18-karat gold version of the Apple Watch. In place of the five-figure cost of the high-end fashion accessory, Apple presented a new top-end Apple Watch made from ceramic materials… that costs a magnitude less than the gold timepiece.

It did not surprise me that Cook quickly moved on to the next slide that proclaimed the Apple Watch as the number one smartwatch. The latter is true, but the former is far more interesting. Even with the might of Apple, its attempt to break into the luxury market with a high-margin slice of technology – a business model that has seen it succeed with smartphones, tablets, laptops and desk-bound computers – failed.

And Apple’s response to Rolex and its performance in the high-end watch market? To turn away from the status symbol of the luxury priced model and focus on a mix of fitness, fun, and fashion. There’s nothing wrong with that (and it should be noted that a similar approach was taken by Swatch when it started) but it’s one of the few areas where Apple has started a commercial fight and not seen it through.

For me this is a good thing. Apple is happy to push forward and experiment with new ideas, but it should be free to change course if something is not delivering. The Apple Watch is the world’s number one smartwatch, but as yet there is no clear answer to what the public are looking for in a smartwatch. Apple’s corrective action pushes the wearable category away from luxury. The next experiment is to enhance the fitness and activity tracking and see what effect this has.

Rolex may have defeated Apple, but this is one battle where the result has made Apple stronger.

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