So because Apple made a deal with Hermes you think they'd make one with Tag? You think Hermes is making $0 from the partnership?
Exactly. Apple needs Hermes far more than Hermes needs Apple. And frankly any Hermes customer who is willing to drop $1500 on a smartwatch is doing so because it says Hermes, not because of the software it's running. Hermes did not need to put their leather bands on a smartwatch, and did not need Apple to sell them in their stores. I would be surprised if Apple wasn't even making less than retail on the watch itself. And by co-branding with Hermes, putting the Hermes brand ahead of Apple's in prominence, Apple is definitely a new entering a new chapter in the traditional role of no-name watch movement makers supplying the guts for fashion luxury watches. Is it the best smartwatch on the planet right now? Sure, but just like luxury fashion watch customers don't buy designer watches for the movements, not all will buy the Hermes because it's an ?Watch. The same is likely true for any well established brand like Tag, or Rolex, et al. The idea that any of those luxury watch companies would lend their brand to Apple for free is laughable. Right now, the ?Watch would likely benefit far more from their reputations in the luxury and fashion watch world than they would benefit from Apple.
That said, the luxury watch makers also have to be careful that they don't damage their reputation for excellence with inferior smart watch offerings put together with shoddy software and badly implemented UIs. But the idea that only Apple can create good software is also amusing, and severely underestimates the Swiss. Regardless, I don't see Apple ever opening up their Watch OS to third parties, any more than they have with the iPhone. However, there is a happy medium along the way that will allow Tag, Omega and the others to create wearables that interface better with the Apple ecosystem using third party OS than possible now. In fact, if Apple continues on their path to dominance in these fields, they are becoming more of a Microsoft-like target for anti-trust investigations. If Apple arbitrarily keeps other smartwatches from reasonably interfacing with the Apple ecosystem, they could find themselves forced into opening up on someone else terms.
Who knows if Apple will continue to dilute their brand with partnerships like Hermes. It's certainly a possibility. One thing such an arrangement would do, by relegating Apple to the movement supplier, is to open up the world of customer style choice for the ?Watch to the wide array options currently available in wristwatches, without Apple having to invest in so many custom designs. I do see watchmakers resisting such partnerships, as they are used to owning everything, but then again, so is Apple, and they've given away a lot to Hermes. It's hard to say how much Hermes has given away if anything, since they too manufacture their own watch movements, presumably so they can maximize profits on their offerings. But anything's seemingly possible now.
"As Reuters reported yesterday (June 13th), Nokia is selling its Vertu luxury phone business to private equity group EQT. While reports indicated Vertu would sell for €200 million (about $249 million), Nokia hasn't released the price it negotiated, although a press release indicates the company will be holding onto a 10 percent stake in the operation.
So Nokia sells of a profitable and growing company? If someone is struggling they would sell underperforming assets not assets that are doing well.
Wait a second.
Just for the record you are saying that as of June 2012 Vertu was a profitable and growing company that was doing well.
Not a dying, shrinking company that was under performing.
So are they growing and profitable? Or are they dying and shrinking like you said here:
Quote:
Originally Posted by sog35
They only sold 26,000 in 2014. Their market is shrinking. Why else would Nokia sell them for $300 mil a couple years ago?
"Pogliani explains the typical Signature owner as someone who "wants a simple phone with one week of battery life. They don't want the internet, they just want to call [because] they have people sorting out other things for them; this is a very top elite of people."
Thats sounds like the defintion of a dying market....
"Although secretive about its finances, Companies House records show Vertu took £133.7m in revenue for the 2013 financial year, with an operating loss of £15.2m."
Yeah I can't find anything for 2014 or 2015.
Maybe they are going down the crapper. Maybe they showed an operating loss as they transitioned from Nokia to Android after they were sold to that private equity firm. They likely had increased overhead for retooling the brand during that period. They had one new phone in 2011, not a single new phone in 2012, and then came out with 3 new phones in 2013.
The details on their financials are scant. But hey, at least Vertu isn't doing as bad as Amazon is as far as losing money goes.
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Shoot, Jeep Wranglers also hold their value. People love them. It's hard trying to find a pre-owned one for sale. They don't last long on a lot.
True story, I used to own a couple of CJ-7's back in the day. The time came for me to sell them so I parked them on the lawn with "for sale" signs.
They literally sat for a few hours when two guys rolled up at the same time and got into a bidding war over them.
Needless to say they were the easiest vehicles to sell that I have ever owned.
I owned a Jeep Wrangler, and got constantly asked by strangers if I was looking to sell it. I finally sold it to a friend, and it wasn't long before he was being asked if it was for sale.
What choice do they have? They don't have the programming chops to build their own proprietary software.
Then they should have got behind Apple's product. After all, Hermes managed to.... unless, of course, you're suggesting that their quality is lower and that Apple is unlikely to have bothered with them.
What choice do they have? They don't have the programming chops to build their own proprietary software.
Then they should have got behind Apple's product. After all, Hermes managed to.... unless, of course, you're suggesting that their quality is lower and that Apple is unlikely to have bothered with them.
You think Hermes asked Apple or Apple asked Hermes? I believe it's the latter
Just skimming the articles, the wording from Vertu is interesting: sales have grown 9 out of the past ten years. The one year they didn't grow was 2008, for obvious reasons.
That may well mean that sales dropped "like a rock" to 10% in 2008, and have been growing again since, but are still an order of magnitude lower than they were. Or it might not. We don't know.
But wording it in that specific way: how else would you interpret it other than "iPhone hurt us A LOT, but things are slowly getting better again"?
WEll, the smart phone market has exploded since 2007, so you could "grow", yet constantly lose market share.
I owned a Jeep Wrangler, and got constantly asked by strangers if I was looking to sell it. I finally sold it to a friend, and it wasn't long before he was being asked if it was for sale.
Ditto. Mine was sitting in my driveway, and I didn't drive it for over a year. The 4-wheel drive transmission had "frozen" because I had left it in low, requiring it to be disconnected before it could be towed away, and I still got double bluebook from a guy who was just driving by and made me an offer.
"While the sale of its luxury arm could be seen as a double-edged sword — Vertu is profitable, but the sale provides Nokia with an injection of cash"
Being "profitable" does not necessarily mean anything. The key issue for any business is whether the profits (more precisely, return on capital) exceeds the cost of capital. If not, you're destroying value withe every additional dollar you bring into the business.
I don't know the data for Vertu, but it's possible that they could have been profitable, yet a value-reducing business.
Is Tags' sales slump being attributed to the Apple Watch?
Yes, it is. A Bloomberg article stated "The introduction of Apple Inc.’s smartwatch, combined with a surge in the Swiss franc and China’s slowing economy, have clouded the outlook for Swiss timepieces."
Guy Semon, General Manager of Tag Heuer stated"Smartwatches represent a challenge to the Swiss watch industry that is comparable to the appearance of quartz technology. We cannot ignore this tsunami that is coming closer."
Quote:
Originally Posted by Gatorguy
Not according to Tag. They say China's economic issues are the problem...
Have you ever heard of General Motors executives saying that their sales are slumping because many of their customers now prefer Ford or Honda vehicles?
I make my living investing. Executives at companies almost never publicly admit that they are losing customers to competing products, instead choosing to cite economics, natural disasters, fuel costs, or just about anything other than the competition. That's how they keep the stockholders calm and keep the press from running headlines like "GM CEO Admits Many Former GM Consumers Now Prefer Ford and Honda Vehicles."
Back in the 1990's I had the income, so I bought a low-end Tag for ~$850. It was a battery powered silver watch with Gold trim. It looked great, but one thing that nagged me was that the second hand didn't hit the tick marks around the dial. So, I called Tag and asked if they could fix that; to which they gave me the address to send the watch in for adjustments. I packed the watch up well, and insured it for $1,000 and mailed it in.
For reasons that defy explanation, the watch was destroyed in transit. It's as if a semi-trailer backed over it. My new watch was crushed.
Then Tag managed to accept the package anyway, despite obvious damage to the package.
Then Tag managed to discard the package I had insured, and put the remains into a plastic bag, and mailed it back to me.
Thanks for posting this. I think Tag and/or its U.S. service center is crooked. I've had two incidents where the same watch was "lost" in its New York service facility. The first time, I sent two Tags in for battery service (since they were to be used for diving and I wanted the gaskets warranted). They were "lost" for a couple of weeks until I inquired repeatedly and then they were found. Many years later, my Tag watch was badly scratched by an authorized dealer and had to be sent in for refinishing. This involved sandblasting, because the watch had a powder finish. Surprise, surprise... my watch was "lost" in the service center again, this time permanently. They cobbled a watch together from spare parts (since it was an early '90s model, and this was in the 2000s) and sent that to me. Why? Because doing the repair would have been way too expensive.
Thus I wouldn't be surprised if they destroyed your watch, had a good laugh over it, and sent it back. Because fixing it was going to be too much work or expense.
Tag no longer even makes watches of the quality they exhibited in the early '90s. Tag Hauer watches are flimsy, gaudy junk now. And your story merely adds to my long-held suspicions about their shoddy sole service center.
Is Tags' sales slump being attributed to the Apple Watch? Not according to Tag. They say China's economic issues are the problem, which would make sense. China is reportedly the world's largest market for luxury watches, even bigger than the US. That's not to say the Apple Watch didn't have some impact too, it might, but China's problems are likely the big issue.
but China iPhone sales are still going strong...so....
but China iPhone sales are still going strong...so....
So... :???:
Are you saying iPhones are the root cause of the flat luxury watch market? Or are you somehow making another connection between luxury goods and iPhones in general? The point you think you're making isn't entirely clear.
Are you saying iPhones are the root cause of the flat luxury watch market? Or are you somehow making another connection between luxury goods and iPhones in general? The point you think you're making isn't entirely clear.
Smartphones are considered necessities in practically any culture. In a down market, people will keep buying and upgrading smartphones; more jobs to be done. Perhaps the traditional watch market is suffering from those consumer choices that now have to be made wrt spending?
Comments
So because Apple made a deal with Hermes you think they'd make one with Tag? You think Hermes is making $0 from the partnership?
Exactly. Apple needs Hermes far more than Hermes needs Apple. And frankly any Hermes customer who is willing to drop $1500 on a smartwatch is doing so because it says Hermes, not because of the software it's running. Hermes did not need to put their leather bands on a smartwatch, and did not need Apple to sell them in their stores. I would be surprised if Apple wasn't even making less than retail on the watch itself. And by co-branding with Hermes, putting the Hermes brand ahead of Apple's in prominence, Apple is definitely a new entering a new chapter in the traditional role of no-name watch movement makers supplying the guts for fashion luxury watches. Is it the best smartwatch on the planet right now? Sure, but just like luxury fashion watch customers don't buy designer watches for the movements, not all will buy the Hermes because it's an ?Watch. The same is likely true for any well established brand like Tag, or Rolex, et al. The idea that any of those luxury watch companies would lend their brand to Apple for free is laughable. Right now, the ?Watch would likely benefit far more from their reputations in the luxury and fashion watch world than they would benefit from Apple.
That said, the luxury watch makers also have to be careful that they don't damage their reputation for excellence with inferior smart watch offerings put together with shoddy software and badly implemented UIs. But the idea that only Apple can create good software is also amusing, and severely underestimates the Swiss. Regardless, I don't see Apple ever opening up their Watch OS to third parties, any more than they have with the iPhone. However, there is a happy medium along the way that will allow Tag, Omega and the others to create wearables that interface better with the Apple ecosystem using third party OS than possible now. In fact, if Apple continues on their path to dominance in these fields, they are becoming more of a Microsoft-like target for anti-trust investigations. If Apple arbitrarily keeps other smartwatches from reasonably interfacing with the Apple ecosystem, they could find themselves forced into opening up on someone else terms.
Who knows if Apple will continue to dilute their brand with partnerships like Hermes. It's certainly a possibility. One thing such an arrangement would do, by relegating Apple to the movement supplier, is to open up the world of customer style choice for the ?Watch to the wide array options currently available in wristwatches, without Apple having to invest in so many custom designs. I do see watchmakers resisting such partnerships, as they are used to owning everything, but then again, so is Apple, and they've given away a lot to Hermes. It's hard to say how much Hermes has given away if anything, since they too manufacture their own watch movements, presumably so they can maximize profits on their offerings. But anything's seemingly possible now.
Seems like Nokia sold Vertu because they were on the ropes financially:
http://www.theverge.com/2012/6/14/3084531/nokia-vertu-sale-eqt
"As Reuters reported yesterday (June 13th), Nokia is selling its Vertu luxury phone business to private equity group EQT. While reports indicated Vertu would sell for €200 million (about $249 million), Nokia hasn't released the price it negotiated, although a press release indicates the company will be holding onto a 10 percent stake in the operation.
So Nokia sells of a profitable and growing company? If someone is struggling they would sell underperforming assets not assets that are doing well.
Wait a second.
Just for the record you are saying that as of June 2012 Vertu was a profitable and growing company that was doing well.
Not a dying, shrinking company that was under performing.
So are they growing and profitable? Or are they dying and shrinking like you said here:
They only sold 26,000 in 2014. Their market is shrinking. Why else would Nokia sell them for $300 mil a couple years ago?
"Pogliani explains the typical Signature owner as someone who "wants a simple phone with one week of battery life. They don't want the internet, they just want to call [because] they have people sorting out other things for them; this is a very top elite of people."
Thats sounds like the defintion of a dying market....
You can't have it both ways Sog.
You have argued yourself into a corner here.
No. My whole point is Vertu is NOT growing and NOT profitable.
I said it would not make sense for Nokia to sell Vertu if they were doing well financially.
Ahh I see. My apologies for misunderstanding.
The fact remains that Vertu was (and likely still is) profitable at the time Nokia sold them in 2012. Nokia simply needed the cash.
http://www.digitaltrends.com/mobile/vertu-is-about-to-turn-over-a-new-gold-leaf-as-nokia-confirms-its-sale-to-private-equity-group/
"While the sale of its luxury arm could be seen as a double-edged sword — Vertu is profitable, but the sale provides Nokia with an injection of cash"
Ahh I see. My apologies for misunderstanding.
The fact remains that Vertu was (and likely still is) profitable at the time Nokia sold them in 2012. Nokia simply needed the cash.
http://www.digitaltrends.com/mobile/vertu-is-about-to-turn-over-a-new-gold-leaf-as-nokia-confirms-its-sale-to-private-equity-group/
"While the sale of its luxury arm could be seen as a double-edged sword — Vertu is profitable, but the sale provides Nokia with an injection of cash"
I don't think Vertu is profitable.
http://www.ibtimes.co.uk/inside-vertu-english-luxury-phone-company-closer-rolex-apple-1489291
"Although secretive about its finances, Companies House records show Vertu took £133.7m in revenue for the 2013 financial year, with an operating loss of £15.2m."
Yeah I can't find anything for 2014 or 2015.
Maybe they are going down the crapper. Maybe they showed an operating loss as they transitioned from Nokia to Android after they were sold to that private equity firm. They likely had increased overhead for retooling the brand during that period. They had one new phone in 2011, not a single new phone in 2012, and then came out with 3 new phones in 2013.
The details on their financials are scant. But hey, at least Vertu isn't doing as bad as Amazon is as far as losing money goes.
I owned a Jeep Wrangler, and got constantly asked by strangers if I was looking to sell it. I finally sold it to a friend, and it wasn't long before he was being asked if it was for sale.
What choice do they have? They don't have the programming chops to build their own proprietary software.
Then they should have got behind Apple's product. After all, Hermes managed to.... unless, of course, you're suggesting that their quality is lower and that Apple is unlikely to have bothered with them.
You think Hermes asked Apple or Apple asked Hermes? I believe it's the latter
Yes, we get it. Since you comment is a retort of some type, you may consider leaving it on a site that doesn't consist predominantly of Apple fans.
Just skimming the articles, the wording from Vertu is interesting: sales have grown 9 out of the past ten years. The one year they didn't grow was 2008, for obvious reasons.
That may well mean that sales dropped "like a rock" to 10% in 2008, and have been growing again since, but are still an order of magnitude lower than they were. Or it might not. We don't know.
But wording it in that specific way: how else would you interpret it other than "iPhone hurt us A LOT, but things are slowly getting better again"?
WEll, the smart phone market has exploded since 2007, so you could "grow", yet constantly lose market share.
Perhaps you're right. But that does signal a perception of lower quality. I am even more dubious now about the $1800 price.
We'll see soon enough, won't we.
You think Hermes asked Apple or Apple asked Hermes? I believe it's the latter
It's on record, Jony Ive said Apple approached Hermes over a year ago at a lunch. So this has been in the works since before they announced the watch.
I owned a Jeep Wrangler, and got constantly asked by strangers if I was looking to sell it. I finally sold it to a friend, and it wasn't long before he was being asked if it was for sale.
Ditto. Mine was sitting in my driveway, and I didn't drive it for over a year. The 4-wheel drive transmission had "frozen" because I had left it in low, requiring it to be disconnected before it could be towed away, and I still got double bluebook from a guy who was just driving by and made me an offer.
Thanks for the clarification.
Ahh I see. My apologies for misunderstanding.
The fact remains that Vertu was (and likely still is) profitable at the time Nokia sold them in 2012. Nokia simply needed the cash.
http://www.digitaltrends.com/mobile/vertu-is-about-to-turn-over-a-new-gold-leaf-as-nokia-confirms-its-sale-to-private-equity-group/
"While the sale of its luxury arm could be seen as a double-edged sword — Vertu is profitable, but the sale provides Nokia with an injection of cash"
Being "profitable" does not necessarily mean anything. The key issue for any business is whether the profits (more precisely, return on capital) exceeds the cost of capital. If not, you're destroying value withe every additional dollar you bring into the business.
I don't know the data for Vertu, but it's possible that they could have been profitable, yet a value-reducing business.
If it's nice I plan on buying one.
Is Tags' sales slump being attributed to the Apple Watch?
Yes, it is. A Bloomberg article stated "The introduction of Apple Inc.’s smartwatch, combined with a surge in the Swiss franc and China’s slowing economy, have clouded the outlook for Swiss timepieces."
Guy Semon, General Manager of Tag Heuer stated "Smartwatches represent a challenge to the Swiss watch industry that is comparable to the appearance of quartz technology. We cannot ignore this tsunami that is coming closer."
Quote:
Not according to Tag. They say China's economic issues are the problem...
Have you ever heard of General Motors executives saying that their sales are slumping because many of their customers now prefer Ford or Honda vehicles?
I make my living investing. Executives at companies almost never publicly admit that they are losing customers to competing products, instead choosing to cite economics, natural disasters, fuel costs, or just about anything other than the competition. That's how they keep the stockholders calm and keep the press from running headlines like "GM CEO Admits Many Former GM Consumers Now Prefer Ford and Honda Vehicles."
Back in the 1990's I had the income, so I bought a low-end Tag for ~$850. It was a battery powered silver watch with Gold trim. It looked great, but one thing that nagged me was that the second hand didn't hit the tick marks around the dial. So, I called Tag and asked if they could fix that; to which they gave me the address to send the watch in for adjustments. I packed the watch up well, and insured it for $1,000 and mailed it in.
For reasons that defy explanation, the watch was destroyed in transit. It's as if a semi-trailer backed over it. My new watch was crushed.
Then Tag managed to accept the package anyway, despite obvious damage to the package.
Then Tag managed to discard the package I had insured, and put the remains into a plastic bag, and mailed it back to me.
Thanks for posting this. I think Tag and/or its U.S. service center is crooked. I've had two incidents where the same watch was "lost" in its New York service facility. The first time, I sent two Tags in for battery service (since they were to be used for diving and I wanted the gaskets warranted). They were "lost" for a couple of weeks until I inquired repeatedly and then they were found. Many years later, my Tag watch was badly scratched by an authorized dealer and had to be sent in for refinishing. This involved sandblasting, because the watch had a powder finish. Surprise, surprise... my watch was "lost" in the service center again, this time permanently. They cobbled a watch together from spare parts (since it was an early '90s model, and this was in the 2000s) and sent that to me. Why? Because doing the repair would have been way too expensive.
Thus I wouldn't be surprised if they destroyed your watch, had a good laugh over it, and sent it back. Because fixing it was going to be too much work or expense.
Tag no longer even makes watches of the quality they exhibited in the early '90s. Tag Hauer watches are flimsy, gaudy junk now. And your story merely adds to my long-held suspicions about their shoddy sole service center.
but China iPhone sales are still going strong...so....
Are you saying iPhones are the root cause of the flat luxury watch market? Or are you somehow making another connection between luxury goods and iPhones in general? The point you think you're making isn't entirely clear.
So...
Are you saying iPhones are the root cause of the flat luxury watch market? Or are you somehow making another connection between luxury goods and iPhones in general? The point you think you're making isn't entirely clear.
Smartphones are considered necessities in practically any culture. In a down market, people will keep buying and upgrading smartphones; more jobs to be done. Perhaps the traditional watch market is suffering from those consumer choices that now have to be made wrt spending?