Watch out: Why nothing sucks like high-end luxe
Are exclusive items becoming obsolete as gadgets become more desirable? The answer could well be yes
In 2015, when the Apple Watch went on sale, the Silicon Valley giant took a leaf out of the Rolex playbook. It released a luxury 18-karat gold version of the high-tech timepiece that cost as much as $17,000 (R228,000), aimed at fashion-conscious, and exorbitantly wealthy, buyers.
Four years later, anybody who bought one may as well have thrown their money away. Not because gold has suddenly gone out of fashion, but because technological developments have rendered their investment obsolete.
Since 2015, Apple’s Watch has since gone through three new generations that have drastically improved its technical capabilities. Give most people the choice of the $17,000 original or today’s $399 entry-level model, and provided they couldn’t melt down the former for scraps, most would choose the latter.
Technological development has little regard for luxury. Last year, exports of Swiss watches fell to 23.7 million units, an 18% decline since 2014, when smartwatches started to hit the market.
Meanwhile, Apple has become the world’s biggest watch company. In 2017, its two-year-old watch business surpassed the century-old Rolex. It now outsells the entire Swiss watch industry. Its bank-breaking gold models, by the way, were pulled from shelves after just a year and a half.
Luxury is never a concept that has worked in the tech industry. Two decades ago Nokia established Vertu, whose handmade, jewel encrusted handsets were meant to make fashion accessories out of cellphones. The idea worked for a short while, but as the pace of phone innovation increased, it became clear that having the shiniest phone was no match for having the best one: gadgets become obsolete quickly whether they sparkle or not. Vertu was sold in 2012 for €200m. Five years later it was sold for a fraction of that, and went under just months later.
Another high-end phone maker, Sirin Labs, whose £10,000 (R175,000) device went on sale in 2016, proved even more of a disaster, selling only a handful of units. It turned out that even the super rich wanted iPhones. And despite its price, the iPhone is anything but a luxury.
Of course, phones have always been the preserve of the tech industry. They are defined by function, rather than fashion. The failures of blingy phone brands should not worry Paris and Milan.
But as tech looks set to invade areas where conspicuous consumption has dominated, that is going to change. The latest reminder of this came last week, when the electric car maker Tesla revealed its latest sales figures. The company said that the Model 3, its mid-priced saloon, was the top-selling premium car of 2018 in the US.
Spend some time in Silicon Valley, one of the highest concentrations of wealth in the world, and this is not hard to believe. Many of the venture capitalists and tech workers in the area could no doubt afford a luxury vehicle, but have opted for a Tesla, which is much cheaper and less exclusive.
No doubt there is an element of virtue-signalling here, especially in eco-friendly California, but Tesla also offers an electric motor and a level of self-driving technology.
In many respects it is doing to the car industry what Apple has done to Swiss watchmakers: showing that people would rather have convenience than display wealth. The Model 3 is as much gadget as motor vehicle, so similar economics can apply. As everyday objects become infused with electronics, shifting the utility of consumer goods away from how they act and towards how they function, this will become more common.
This is only likely to become more prevalent as tech extends its tentacles around the global economy, in particular the rise of the gig economy, automation and subscription-based services.
Digital services often thrive because of “network effects”, in which their utility increases the more people use it –social networks, for example, or apps such as Uber, which require a steady supply of both drivers and passengers to function.
In future, some economists predict that we won’t own cars at all, but instead be ferried around by roving swarms of driverless robo-taxis. Network effects, which are defined by scale, are the antithesis of luxury, which is defined by exclusivity.
Who’s to say where this will lead? Abundant record collections are no longer a display of disposable income now that Spotify exists. Most of us are spending more of our time in cyberspace, where there is no pressure to wear fancy clothes. Run with this idea, and one day we may be living our lives in virtual reality, where software allows anything to be replicated endlessly.
That is an extreme scenario, and one we are unlikely to end up in, but the demise of the Swiss watch industry at the hands of a computer maker might have seemed so too. The digital revolution has upended the media and retail industries. Evidence suggests that on current form, it could make the concept of luxury goods obsolete.
- © The Daily Telegraph