The Wearables Road Ahead

I had a meeting with a smartwatch maker last night who showed me one of the coolest wearables I’d seen in a while. It will launch in a few days and it looks gorgeous with amazing attention to detail and a deep understanding of what has been missing in the smartwatch space thus far. He and his team have been working on it for a while and they know what they’re doing. From the case to the interface to the band, everything was in its right place. I was excited.

I was also worried. The product, like so many watches, is landing at time when wearables – old-fashioned watches included – are about to experience a sea change. Like Creative coming out with increasingly fancier MP3 players just before the iPod came out, I’m worried that all of the oxygen will be sucked out of the wearables space. No matter how nice, no matter how interesting, and no matter how well-built these things are the wearables space is about to change drastically and I’m worried that good products will get trampled underfoot.

The Race To The Bottom

The product hype cycle goes something like this. A major player – in this case Apple (and it’s always been Apple since about 2010) – announces something is coming. After the announcement a period of radio silence ensues. This is the period during which all other manufacturers wait and see. Wonder why there aren’t hundreds of Android Wear devices out there, from $100 sport models to $10,000 fashion models? This is the reason. No manager will take a bet on a space when I company like Apple is in the mix.

Once the product is launched, however, all bets are off. Many manufacturers will copy the Apple Watch verbatim, creating Watchalikes that will barely sell. Major players, emboldened by a list of things they can do that Apple didn’t, will launch their own offerings. Smaller players will move in and Chinese OEM will flood the low end with pieces that purport to be on par with current offerings but aren’t. And will make another smartwatch for some reason.

The race to the bottom in new markets is very real and very exhausting. The last race to the bottom that truly mattered happened in the netbook space and it resulted in a collapse of the form factor for years until Dell got it right in the Dell XPS 13, Apple perfected it in the Air, and Google made a valiant effort at finalizing the form factor with the Pixel. But this race wasted lots of time and effort and, most importantly, resources. A lot of plastic and silicon went into making underpowered laptops for a discerning and fickle audience.

This is why products that fall outside of the traditional manufacturing line-up will flounder in the upcoming wearables market. Fitbit might do well – they’ve already defined themselves as a single-purpose tool with mass appeal – but smaller companies like Jawbone and Basis are going to feel the pinch. And higher end startups like the aforementioned smartwatch will have little purchase in a market flooded with competing watches from established competitors. Once Motorola exits what is clearly a quiet period after the launch of the Moto 360 we can expect a half dozen new models to drop in rapid succession. It’s like Preston Tucker launching in the heyday of the land yacht – sure the product his car was superior but why buy it when there were so many only slightly-inferior competitors out there?


It is my expectation that the Apple Watch will be the go-to fashion bracelet of this decade. It will appear on wrists from Brazil to Japan and it won’t lose steam until the wearable form factor is supplanted by something we embed directly in our neural cortex. There will be plenty of competition and standard watchmakers will try their hardest to gain the same market share but in the end this is the new iPod – it’s the product to beat and the product that extinguishes all outside desires.

But what if the smartwatch river flows into the niches left behind by traditional fashion watches – the Calvin Kleins and Fossils of the world – and replaces it? What if there is room for a myriad models and wearables become the new jewelry? As we well know technology is hiding deeper and deeper into the things we use and with a strong enough battery, a seamless interface, and a sense of aesthetics we can safely assume that much of what we now call jewelry will soon be intelligent.

The economics of luxury are far removed from the economics of electronics. Electronics are fast-moving goods, designed to be retired in a year or two. Luxury items, at least in the current incarnation, are designed to either be held onto for a lifetime – think a Rolex watch – or replaced each season (or kept for special occasions) – a Prada skirt. What truly matters in luxury marketing is provenance, glamour, and facade. When you buy a Birkin bag you are potentially buying a better bag for your money. You are also buying the story of the Birkin bag – Hermès CEO Jean-Louis Dumas sat next to Jane Birkin on a flight and she was complaining about her bags so Hermès made her a special one. You’re also buying the materials, the workmanship, and a multi-million dollar marketing spend. The result is a perfect storm of marketing power. You know you want something for a strange, ineffable reason and the more you see the more you justify your purchase. When – not if – electronics makers are able to replicate this their product sales technique then we will truly be powerless.

So perhaps that well-made smartwatch is the first in a long line of luxury electronics, aimed at a more discerning consumer. Sure they have to change the way they sell the things – no more speeds and feeds – but once we come out the other end of all this we will be in a changed world.

Maybe I’m Wrong

I’ve been doing a lot of pontificating on these concepts over the past few months and I know I might be wrong. Maybe all of these are just the same economic models repeating. “Apple makes computers, Microsoft makes spreadsheets, and Samsung makes dishwashers,” said one of my contacts in the watch world. “You don’t want to buy your watch from any of those guys.” And maybe they’re too set in their ways to change now, years after those well-worn ruts have defined their P&L statements and their management styles. Maybe newer, smaller, and more luxurious players have a chance in this market and perhaps, one day, we’ll be passing down our smartwatches instead of our Patek Philippe. Stranger things have happened.