LVMH hopes to take a bite out of Apple’s business
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LVMH hopes to take a bite out of Apple’s business

Luxury giant LVMH is planning to release its own smartwatch, in a move that may signal increasing convergence between technological and luxury trends. The company will also be hoping to steal some of the limelight from Apple Watch, which might be best thought of as a borderline success. Apple’s hopes for Watch failed to materialize – it has not become the next iPhone – but it’s hard to consider it a failure. Today, Apple is the world’s second-bestselling watch brand.

LVMH’s share price has risen by 53% over the last 12 months

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SOURCE: Yahoo Finance

While Apple Watch’s debut heralded in prophecies of doom over the future of the Swiss watch industry, they have not come to pass. If anything, this year has been kinder to luxury timepieces than previous years. And while Apple has made significant headway in the watch market, the older players in that industry are starting to close the distance. LVMH’s smartwatch may be part of a growing trend for luxury companies to claw back market share in the horology space.

John Guy, an analyst at MainFirst Bank AG, thinks this will be the case. He says: “We’ll see more luxury brands break up the smartwatch duopoly between Apple and Samsung. It not only provides consumers with a luxury option, where the aesthetic is more in harmony with technology, but it also provides a springboard for younger consumers into traditional Swiss watches at a later stage.”

LVMH isn’t the only big luxury company to announce a smartwatch. Rival Richemont has also entered the fray, as titans of the luxury world struggle to digitize and modernize at breakneck speeds. LVMH is leading the field here, employing former Apple Music exec Ian Rogers as chief diital officer in 2015 and launching two multibrand Ecommerce sites this year for fashion and beverages.

According to the company, the new watch will be powered by Google’s Android operating system, and will be targeted at affluent travellers. Possibly as a result of this targeting, it will be the first Android watch to function in China. Modeled after the mechanical Tambour line, it will be traditionally round as opposed to Apple’s rectangular design, and include all the standard functionality one would expect from an Apple Watch competitor.

Disclaimer

Dominion holds LVMH and Richemont in its Global Trends Luxury Fund.


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Disclaimer
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.