Apple's rumored iWatch would not be a watch, but a complement to an iPhone. Probably some snap around bracelet, with a wireless connection to it. With, for example: automatic passcode unlocking, NFC for automatic payments, help finding your lost phone, etc.
Samsung has also confirmed they are also working on a watch.
The Swatch CEO has come out to say that he does not think its a big deal.
Yes, luxury mechanical watches and an electronic iPhone-complement device are different products, addressing different markets. One is an intricate, delicate piece of machinery - the only piece of jewelery men can wear. The other would be a convenience.
For investors in Swatch and Richemont, if the iWatch does take off like the iPhone did 6 years ago, the key question is: Can you wear both the iWatch and your mechanical timepiece at the same time? I don't think so. At best, its redundant. At worst, you look like a pretentious dick. Dress watches - for special occasions - may not be affected, but any watch that you wear to the office would be no longer required.
These products may never even see the light of day - large companies have dozens of R&D projects at any time, many of which will die. It seems a bit extreme to run from a rumor. However, given Apple's track record, its very difficult to predict how the new products they define will shape our world, when the only thing you know is the old products. And a reminder of all the companies that Apple has destroyed.
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