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Lu Zurawski

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Lu Zurawski - ACI Worldwide

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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Apple Watch - Can It Tell A Story?

01 May 2015  |  4932 views  |  0

I've tried to resist writing about Apple Watch. What is there to say that hasn't already been seen in this week's "unboxing" videos, where perplexed buyers struggle to synchronise?

 

But despite my scepticism (unusual for a serial Apple consumer), there is a story to be told. Apple Watch is not necessarily a waste of time. It could influence the future of watchmaking. It may shape the wearables market. And it will probably have an impact on Retailing and Banking too.  

 

But what about the classic test of a really good watch: when it gets handed on, can it tell a story?

 

To give you a sense of what I mean, the watch I’m wearing now shares a birthday with me. It has a battered, stainless steel case, containing a mechanical movement. It first ticked around 1st March 1965 when NASA told its Swiss manufacturer, Omega, that this type of watch was to accompany NASA’s astronauts into space.  It's not bad at telling the time, even in extreme conditions. After an explosion destroyed the controls of the Apollo 13 spacecraft in 1970, commander James Lovell used his Speedmaster to time the crucial, manual firing of the rockets needed to get his team back to Earth. Omega still make identical Speedmasters today but I like the patinated old-timer, not because it tells the time - it tells a story.

 

I cannot imagine Apple Watch being capable of a similar tale. I can visualise the owner of a lost Edition bemoaning their loss of gold, but feeling relieved that all their apps and data were restored into a new device thanks to iCloud. No real loss - no real story.

 

And can you imagine a future remake of the Pulp Fiction scene where Captain Koons (Christofer Walken) explains to a young Butch (Bruce Willis) how his father had hidden the family heirloom during the Vietnam War (ouch!). When I try to substitute an Apple Watch for the old Knoxville gold watch the storyline just falls apart.

 

I'll forgive you for concluding these are the nostalgic musings of outdated Generation X man.  But I have also conducted ersatz research into kids’ attitudes to watches. I noticed one of my son's friends last weekend wearing a plastic wrist band, that looked like a festival gig tag. It was a yellow Casio digital watch, almost identical to the one I aspired to when I was a kid. The display was barely visible, but he definitely used it to tell the time instead of his iPhone.  He explained that it was a present from his Mum, and he preferred it to the big G-Shock watches favoured by many of his 15 year old pals. My daughter explained most of her friends just look at their phones. But quite a few liked fashion brand watches like Armani, Kors and DKNY. Some had ICE and Swatch.

 

I was a surprised to see younger kids having this level of interest, particularly as the last YouGov survey on watches claimed that 60% of 16-34 year olds use a phone as their primary timepiece. Admittedly mine was only a small research sample, but I also found very little Generation Z excitement about Apple Watch.

 

So if the Apple Watch does not appeal to me (Generation X) nor to Generation Z, I guess Apple are relying on Millennials - i.e. those who really "get" technology - to buy into these new wearables, driving disruption of the existing watch industry. This version of the typical Apple narrative -  i.e. Apple enters a new industry, early adopters and evangelists re-shape the market, then the whole industry gets redefined - could fuel big sales of Apple Watch. So will time be called on famous watch brands like Omega, Rolex and Tag Heuer?

 

In my opinion - no.

 

The watch industry has dealt pretty well with big disruption over the last decades. It survived the "Quartz Crisis" of the 1970s. This was when the traditional (typically Swiss) mechanical watchmakers were swamped with competitors like Seiko from Japan with reliable, good looking and inexpensive wristwatches that challenged the fundamentals of the mechanical watch industry.

 

And yet last year, out of 1.2 billion watches sold, the percentage that are mechanical (as opposed to electronic) - is a stunning 77% (www.statisticbrain.co/wrist-watch-industry-statistics/). Today Switzerland-based Swatch Holdings is the world's largest seller of watches (18% share and $8.8 BN revenue according to the Federation of the Swiss Watch Industry).  

 

Coming back to the role of wearables in retailing, shopping and payments, it would be cool to dispense with plastic cards, passwords and PINs, and simply rely on the identity and verification capabilities of new connected devices. I love the concept of "transaction free" commerce where you can walk into a shop and walk out with goods without needing to check-out, secure in the knowledge that only you (and your unique biometric profile as rendered by your wearables) could have authorised this purchase. And reasonably sure you're not about to get a kicking from a store security guard.

 

I can see the convenience value to me in this vision of the ultimate purchase experience. And if I am offered a discreet wearable that helps me participate then I'll consider it. But I'll not hand over my personal space (my wrist) to a corporation like a retailer or a bank just to help them reduce their transaction costs. I expect something considerable back in return. And I'm certainly not going to spend several hundred pounds on an ungainly device to make this happen.

 

Generation Y folk will be more likely to buy into this vision, and some will be happy to pay for an Apple Watch as their preferred personalised device.  And it is entirely plausible that a whole new wearable ecosystem will be evolve to make wearers' life easier - and not just for shopping.

 

But Apple is a long way from owning this vision. And in same way that the big watch industry responded to the Quartz Crisis, agile watch brands who know their market will offer products that do the job of a proper watch (remember - they need to tell a story), whilst also providing the connectivity and identity functions needed by users in a transaction free world.

 

Traditional manufacturers have already acted. For example at this year's Baselworld show, Bulgari announced a smart watch with an NFC chip able to make payments and open car doors. Similar announcements came from Mondaine, Breitling and Frederique Constant.

 

Jean-Claude Biver, the CEO of TAG Heuer, announced that his company will be making a smart version of its classic Carrera watch. Although it will look very much like the original timepiece, it will incorporate geolocation and distance tracking. The TAG watch is being developed with Google, so watch out for the new wearable battleground between Apple's IOS and Android Wear.

 

Monsieur Biver also had a dig at his emerging competition - "Apple will get young people used to wearing a watch and later maybe they will want to buy themselves a real watch". The arrogance! He (and I) may not the last to underestimate the potential of Apple. 

 

But he makes good sense – customers will continue to buy a good story. 

 

 

 

 

 

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job title Practice Lead, Consumer Payments, EMEA
location London
member since 2014
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ACI. Bipolar payments expert: Curious/optimist & Realist/skeptic. Still playing with Mondex wallet.

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