Today, mobile phones are an essential tool in the lives of 3.4 billion people. In particular, users increasingly look to their handsets as a first port of call when it comes to telling the time – a tendency that could generate nervousness within the watch industry.
However, several brands are trying to turn this trend to their advantage, launching high-end, high-tech smartphones phones that fuse technology with the craftsmanship traditionally associated with the art of watchmaking.
Yet with Apple selling a record 17 million smartphones last year, and the decision requiring entry into a relatively uncharted retail market, is this latest venture a shaky marriage of convenience, or successful merger of two relatively disparate sectors?
Until now, luxury handsets have been predominantly developed by mass-market phone retailers such as Samsung or Nokia and its luxury subsidiary Vertu – often with exorbitant prices and limited sales success.
Now, watch brands seem willing to compete with leaders from a rival industry for market share within the rapidly expanding field.
According to Euromonitor International, a London-based research outfit, the luxury mobile phone market will grow 37 percent to $719 million between 2010 and 2015.
Many executives see these fusion projects as inevitable. Jean-Christophe Babin, chief executive of TAG Heuer, attributes a shared DNA between phones and watches – rooted in micro-mechanics – to his brand’s willingness to enter the market.
Mr Babin says: “At the core of Swiss watchmaking lies an obsession with precision and efficiency – maximum performance with the minimum amount of energy used. This ideology shares a harmonious parallel with the creation of groundbreaking smartphones.”
Racer, TAG’s third smartphone in four years, launches next month. A touchscreen Android with cutting-edge 3D interface, the phone is constructed from carbon fiber, titanium and rubber, the same aeronautical materials used in the racing cars and fighter aircraft with which TAG has always aligned itself.
Mr Babin says: “The innovation we are seeing today is comparable to the progress we saw in the 1970s, during the early years of the sports watch – the progress takes us into new territory.”
Christoph Behling, TAG Heuer’s chief designer and the visionary behind its phones, suggests acknowledgment of shifts in consumer psychology are also crucial to the success of a design; in this instance, the emergence of the phone as a luxury accessory and status symbol.
“For decades, a beautiful watch was the most personal product on a person’s body – in the 21st century, that became the phone,” he says.
“A handset today is not just a means of communication; it can also be an important conduit of self-expression and success. As a brand, we can’t ignore the rise in demand for a new type of product that combines performance with personality, something that traditionally has been the driving force behind our watches.”
Recognition of this also played a strong part in the decision of Ulysse Nardin to release the limited edition Chairman phone this year.
Made of 1,846 individual pieces, the smartphone can be customized to lavish bespoke specifications – a full pavé diamond and 18-carat white gold model retails for about $170,000.
Unsurprisingly, a significant proportion of sales so far have been in China, Russia and the Middle East.
“We have found that taste in luxury products tends to be more overt within the emerging markets,” says Bobby Yampolsky, co-founder of Scientific Cellular Innovations, which developed the Chairman under a licensing deal with Ulysse Nardin.
“While technology is a vital element to their choice of phone, our customers are driven by wanting to make a strong visual statement that sets them apart from the crowd.”
However, heritage is equally important to this new breed of client, hence the presence of numerous Ulysse Nardin hallmarks on the Chairman, including the brand’s emblem, an anchor and the iconic rotor that winds the watch automatically, harnessing the movement of the wearer.
Patrik Hoffman, Ulysse Nardin’s chief executive, says: “If this is the future, then we need to pave a way into collaborations such as this, while retaining ultra-exclusivity and preventing brand dilution.”
Both brands agree the “über-luxe” handset market was an opportunity missed by the phone sector and the history and tradition bought to the table by the watch industry could potentially change the stakes.
TAG Heuer’s Mr Babin says: “The most interesting thing about this sector is the vast price vacuum that exists between its two ends – 400 percent – and its dominance in emerging markets.
“Despite recent conservatism thanks to the downturn, the US and Europe still account for 60 percent of all luxury goods sales. It is crucial that we make this new product more relevant to consumers by targeting the right price point.”
He adds: “I believe the Racer will broaden the market and put this new luxury product more in line with luxury spending.”
The TAG Racer will cost about €2,800 ($3,520), aiming to eclipse the old world of the premium mass market and carve out a new niche: accessible luxury.
Whether it, or the eye-wateringly expensive Chairman is able to challenge the dominance of Apple and other smartphone makers in relentless and dizzying technological innovation, is an interesting question for luxury that remains to be answered.