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"Better a diamond with a flaw than a pebble without." - Confucius

Almost a year ago, I had a thrilling discussion with the sales team of Les Ambassadeurs in Lucerne. The boutique at Kapellplatz was new and we had a workshop about how online changes the game in fine watchmaking. TAG Heuer’s 1st generation Carrera Connected was already out there and a good part of the conversation circled around the manufacture’s entry in the smartwatch world in relation to the online behaviours of millennials and elder clients. Less than 12 months passed and over 50,000 Connected units were sold, TAG Heuer revealed the new Connected Modular 45 at the Rütli Meadows on the banks of Lake Lucerne. At the event hosted by Jean-Claude Biver (TAG Heuer CEO & President of the LVMH Watch Division) and at the following cocktail at Les Ambassadeurs Lucerne boutique, where he was joined by Joachim Ziegler (Les Ambassadeurs CEO), I felt unconcealed excitement.

 
Ever since smartwatches emerged, fine watchmaking companies have been desperately looking to give the right response to them. The long-standing initial negligence was replaced by anxiety, followed by trials to fuse the two worlds. Watchmaking, one of the slowest and most traditional businesses, has been forced to switch gears and enter one of the fastest lanes.

View from Brunnen, at the Lake Lucerne and the TAG Heuer booth
View from Brunnen, at the Lake Lucerne and the TAG Heuer booth
TAG Heuer Connected Modular 45 press conference
At the press conference: Joshua M. Walden (SVP and General Manager, New Technology Group, Intel), Jean-Claude Biver (CEO of TAG Heuer, President of the LVMH Watch Division), David Singleton (VP Engineering Google) and Arthur Touchot (European Editor of Hodinkee)
tagheuer_049_01_1
Jean-Claude Biver (CEO of TAG Heuer, President of the LVMH Watch Division) and Joachim Ziegler (CEO of Les Ambassadeurs)

But why would a Swiss watch company care?

Since the revival of mechanical watchmaking, brands have focused on establishing zealous fan clubs by whipping up intense emotions. As sales grew, revenue expectations grew further, which are tricky to satisfy on a volatile market with a limited number of high-value pieces. Companies had to be increasingly serious about two things to survive: establishing stabile streams in lower priced segments and extending the fan club with individuals, who would traditionally not go down in the sales funnel. Creating a coherent collection of products with clear messaging from the entry level to the high-end, while living it up to the brand’s overall image, is the starting bid in this game. 

This is where the smartwatches may come into play.

The toy of the 21st century has been made in response to the needs of the 21st century. As they start to make more sense, they become more integrated into everyday life. They are not watches at all, they satisfy far different needs – to be connected, to be informed and to stay in control. The reason we call it a watch is that it is worn just like a watch – the wrist happens to be always at hand for all the smart things since Michael Knight.

The desire to be connected, informed and in control is genuinely independent from the inexplicable love for mechanical timepieces. I bet, many fine watch collectors already own a smart watch and will always get the latest and greatest, while still opting for a new mechanical complication or an auction piece with good pedigree. Therefore, in my view, these two only compete for the wrist-space.

TAG Heuer Connected Modular 45
TAG Heuer Connected Modular 45

On the other hand, traditional watchmaking companies entering this market such as TAG Heuer can gain a double benefit. With careful positioning and good collaborations, they can sell their unique quality hallmarks to high-end smartwatch buyers, and make good money by capturing a reasonable chunk of that market. Additionally, these products can be hooks sharpened for attracting a new segment of buyers. By entering the wardrobe of the client, TAG Heuer can grow love for the brand and eventually for mechanical timepieces too.

There is a third opportunity the company can exploit in their traditional watch business: by jumping into the fastest mills of the consumer electronics and the fashion sectors, they can develop an enterprise that is sleek, online native and receptive to the changes in client demands. In fact, they do not have any other choice since the sincerity of consumers can be loud and cruel on the internet. This machine can perform much better in the traditional space as well. The partnership of Google and Intel, both with a wealth of consumer electronics and online experience, can be beneficial in this regard too.

See Now, Buy Now

Jean-Claude Biver made himself rather clear: learning from the experiences in the fashion industry TAG Heuer adopts the See Now, Buy Now concept. Watches presented will be on sale from that moment on in TAG Heuer boutiques, form a selection of retailers, and available for delivery via the brand’s online store. Is there client demand for this in Switzerland? – by the end of the day multiple pieces were sold just at Les Ambassadeurs.

The speed and timing of the announcement is interesting from another aspect too. Everyone expected this model to arrive mid-2017. Instead, TAG Heuer announced it a week before Baselworld on two locations. One reason can be that they want to have individual spotlights for important novelties and dedicate events to them. Another might be that Jean-Claude Biver feels that being the first to have Google’s new Android Wear 2.0 for some little time alone on this speedy market can grant a serious business advantage. Or perhaps others are about to come out with something similar?

Jean-Claude Biver with the new TAG Heuer Connected Modular 45
Jean-Claude Biver with the new TAG Heuer Connected Modular 45

Versatility

The collaboration between TAG Heuer, Google and Intel is cool even though TAG Heuer is the mouse in the land of the giants (Google 2016 revenues were over $90 billion and Intel’s were just short of $60 billion, while the entire LVMH jewellery and watch revenues – including TAG Heuer – were around $4 billion). Yet, the three bring their core expertise to create a cool product. Intel’s hardware and Google’s Android Wear 2.0 platform encode the personalization capabilities, which will be available in other devices, too. TAG Heuer made the package unique and talk to a well-defined audience by adding the versatility of the housing and looks. Millennials but even members of generation X will love the range of customization options that can be added to further impersonate the content.

Satin or polished grade 5 titanium, plated with 18k 5N rose gold, or ceramic with or without diamonds are the options for the case, while straps come in 18 colours and materials. Lugs and straps are interchangeable, what’s more, even the entire electronic module can be replaced with something … yes, more mechanical.

TAG Heuer’s manufacture chronograph Tourbillon Heuer 02-T movement fits right into the case and is offered in a package with the smartwatch or later separately (just like the Calibre 5 module). What is this if not a sales conversion?

The modularity of the TAG Heuer Connected Modular 45
The modularity of the TAG Heuer Connected Modular 45
New TAG Heuer Connected Modular 45 with the manufacture chronograph Tourbillon Heuer 02-T module
New TAG Heuer Connected Modular 45 with the manufacture chronograph Tourbillon Heuer 02-T module

 
Only time will tell if traditional brands like TAG Heuer will be successful with the smartwatch. The sales of the previous model (over 50,000 units as opposed to the projected 20,000) have proven them right so far. The energies of Jean-Claude Biver have charged the company and the entire LVMH and he seems to tune the tone and messages of the group’s brands very consciously. In this strategy, smartwatches will have a place in certain brands’ portfolios, others will always be mechanical. Some brands will again be mechanical only with a tweak by a smart strap. Either way, the parallel challenges of continuous growth and the changing behaviour of the new generations necessitate revolutionary steps. TAG Heuer has made such a step – just like Les Ambassadeurs, the traditional multi-brand store. 

Let the TAG Heuer smart-fun begin online or at any Les Ambassadeurs boutique. Enjoy!

 

Photo credits: TAG Heuer, Loupiosity.com.
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