Europe needs swagger

Apple’s luxury watch will become obsolete: Tag Heuer CEO

Europe: home of luxury brands and goods

Switzerland's luxury watch industry is making a leap from its traditional production and models to win customers back from disruptors like Apple, the head of watchmaker TAG Heuer told CNBC.

On Nov. 9, TAG Heuer will unveil its $1,800 Android-powered smartwatch in its attempt to take on the Apple Watch, which offers a mid-level range that costs a maximum amount of $1,099.

The president of LVMH's watch division and CEO of Tag Heuer, Jean-Claude Biver, told CNBC Monday that like any newcomer entering into your field, Apple is "big competition."

"How successful has Apple been? We don't know. In the beginning, they were speaking about 10 to 20 million pieces, then sometimes we say they only sold 5 million. Nevertheless, to sell 5 million watches when you have not been a watchmaker is genius. It's phenomenal."

"Now how will it act on the Swiss traditional watch industry? Certainly a big competition, huge! It will be a tsunami, for me. In the price segment, between say $200 and up to eventually $2,000."

Apple Watch gold edition.
Source: Apple Inc.

What really raised eyebrows this year was when Apple unveiled its luxury 18-karat gold selection of the Apple watch, with prices ranging from $10,000 to $17,000. On top of that, Apple teamed up with luxury designer, Hermes to produce "Apple Watch Hermes", a new collection of Apple Watches featuring finely crafted leather straps designed by the French design house.

While the Apple Watch is worthy competition to the likes of Tag Heuer's $1,800 watch, Biver argues any connected device selling above $2,000 is a "huge problem."

"Above $2,000, the connected watch has a huge problem. There is no eternity, it means it will become obsolete and who wants to buy a $10,000 - $20,000 watch, that becomes obsolete after five or 10 years?"

The Swiss watchmaker has argued in the past that the technology behind an Apple Watch would eventually become outdated, therefore in the long run; a traditional timepiece would outlive evolving technologies.

Apple CEO Tim Cook announces the Apple Watch during an Apple special event at the Yerba Buena Center for the Arts on March 9, 2015, in San Francisco
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However, traditional brands cannot stay relevant if it repeats tradition and nothing else, Biver argues, adding that creativity and innovation is essential for luxury brands to thrive.

"To repeat tradition, you must know, you must understand and you must respect tradition but on top of this you must innovate. If you don't innovate and you just repeat, you are ending up in a museum and people want to be connected to innovation and creativity," Biver said, adding that they are staying relevant by satisfying new consumer tastes.

"I don't say we want to compete with Apple because we're not in the same business, but we can compete any technological product. So this means we believe in it (smartwatches), but we also believe in our traditional product. We believe in both in fact."

—By CNBC's Alexandra Gibbs, follow her on Twitter @AlexGibbsy.