The luxury watch is dead. Long live the smartwatch.

Last week was a big week in the world of watches. Swiss luxury watchmaker Tag Heuer announced Tag Heuer Connected, the company’s first foray into smartwatches. Surprisingly, this earns the company the title of being the first traditional watchmaker to make the transition into the smartwatch space.

The device itself is styled on a regular mechanical Tag Heuer watch with a pricetag to match – it’s set to retail for $1500 (about £1000). It has a circular 1.5 inch display running at 360 x 360, 4GB of storage, a 1.6GHz dual-core processor and 1GB of RAM. And, of course, it runs Android Wear, the only real viable non-Apple platform, despite what Samsung may pretend.

This was perhaps a more significant moment than people realised – it could be game over for traditional luxury watches.

A lesson from history

To explain, let’s go back to 1998 when mobile phones were taking off. Phones didn’t do much back then. You could make calls, text, and maybe play Snake, if you were lucky. It was around this time that some phone makers attempted to make “luxury phones” a thing. Nokia, for example, established “Vertu”, a luxury brand explicitly trying to sell phones as a fashion accessory. What this essentially meant was taking a fairly standard Nokia handset, slathering it in diamonds and expensive metals, jacking up the price and trying to sell it to people with too much money.

It might have worked too – the company certainly kept pumping out new “luxury” phones. But then, in 2007, the iPhone arrived and changed everything. As soon as everyone caught on, there was no other phone that mattered, especially amongst the affluent types who might previously have purchased an expensive Vertu. The mobile phone went from proto-fashion accessory that can make calls to a product defined by its functionality. And the same is now happening to watches.

Coincidentally, this week we found that that Vertu is having another go: the brand has been sold to Chinese company, Godin Cyberspace Security Technology, and will be directly aiming at the Chinese market, but it’s still likely to face the same problem of “not being an iPhone”.

Function over form

Think about the way that luxury watches are supposed to work. For the less wealthy, they might save up to buy a nice watch as an expensive gesture or significant gift. A watch given as a retirement gift is worn for the rest of the recipient’s life and passed down as an heirloom.

For the rich, it’s more affordable, but the meaning subtly shifts: a rich customer drops a hefty wedge on a Tag Heuer or a Rolex to make a statement about how wealthy and powerful they are. Essentially, it acts as a status symbol.

The challenge of the smartwatch to luxury watches is that they render both of these cases moot. After all, we don’t pass down ancient computers in our families. And who needs a status symbol when you have a status update?

Smartwatches are on the cusp of transforming our understanding of what a watch is for. Similar to how iPhones became a big deal because of the apps they can run, a smartwatch that’s capable of displaying incoming messages and controlling a TV is more useful than a simple device that can tell the time.

A watch is no longer about its looks, or signalling status, it’s about the technology inside. Just as it’s increasingly weird to say the words “mobile phone” instead of just “phone”, it won’t be surprising if eventually the word “watch” is expected to describe a device on which you can take calls.

And this is the point at which Tag Heuer should get worried.

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