The arrival of Apple's smartwatch over the weekend likely does not signal high noon for luxury watchmakers, but they could feel some heat as the iconic tech company introduces its first new product category in years.
Nearly a million customers pre-ordered the Apple Watch on Friday, according to some industry estimates, and the company could sell over 20 million in the first year on the market. That won't make up a large portion of Apple's overall revenue, more than $182 billion last year, yet it's a huge gravitational shift for anyone that has to compete.
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The Apple Watch costs $350 at the low end and range up to $10,000 for luxury versions. The lower end of the range, which is the most common preorder so far, puts the product in direct competition with a large swath of business for both Movado and Fossil.
Apple's entry into the fashion watch market has drawn plenty of skeptics. There are already smartwatches on the market and critics say it duplicates the function of a smartphone. Criticism aside, it represents a threat at Movado Group Inc. and Fossil Group Inc., a number of industry watchers said.
KeyBanc Capital Markets and Pacific Crest lowered their earnings expectations for both companies because of Apple over the past two days.
Shares of Fossil Group Inc. fell almost 3 percent Monday and shares of Movado Group Inc. slipped more than 1 percent.
Apple Inc., based in Cupertino, California, is famous for introducing products that no one knows that they want or they need, and turning them into industry standards. Think about the iPad. It also has a history of driving innovation in the markets it enters. Think of its phones and music players.
The drive to create watches that do more than tell time was already underway and established watchmakers are engaged.
Tag Heuer is developing its own smartwatch in conjunction with Google Inc. and Intel Corp. Clothing maker Guess Inc. is working with Martian Watches to develop a line of smartwatches as well.