Apple Inc. (NASDAQ:AAPL) is Goliath and The Swatch Group SA is David as the latter is also launching their very own smartwatch, Jon Cox told CNBC in a recent discussion.
According to the head of European Consumer Equities at Kepler Cheuvreux, The Swatch Group SA has an uphill battle ahead of itself as it tries to wrestle with the 800-pound gorilla that is Apple Inc. (NASDAQ:AAPL).
“That is really a sort of David and Goliath type of quest of course. Swatch Group is in the role of David. Their annual revenue is barely 10 billion Swiss francs put in perspective to the size of Apple,” Cox said.
Nonetheless, the Swiss watch maker, Cox said, is applying its very own approach to making smartwatches which may be a plus as it competes with the iPhone maker. According to Cox, Nick Hayek, Jr. the CEO of The Swatch Group SA, said that they do make watches and now they want to make their watches smart going into the future.
The goal of the company is not to have a miniature smartphone on a user’s wrist, Hayek is quoted by Cox as saying during the launch of the watch maker’s smartwatch.
“What they unveiled yesterday was like a fun, upmarket fitness band called the Zero One. This is aimed at [sports] enthusiasts. It takes your heart rate and nothing too out of this world but it fun and frivolous. It retails for just about over $100 versus the $350 and upwards for the mini-computer you’ll get with an Apple,” Cox said.
To compete with Apple Inc. (NASDAQ:AAPL) and other companies, The Swatch Group SA highlighted the Near Field Communication capability of their smartwatch and their deal with UnionPay in China which enables the watch to be a payment device. He thinks payments will be a meaningful revenue stream for the Swiss company. The NFC capability, he noted, however, is not just for payments but also for other features such as a key and loyalty programs.
He said The Swatch Group SA is making a smartwatch now to prevent Apple Inc. (NASDAQ:AAPL) from cannibalizing the sub-$1,000 watch space which accounts for 20% of the Swiss company’s profits.
David Einhorn’s Greenlight Capital owned about 8.61 million shares of Apple Inc. (NASDAQ:AAPL) by the end of December.
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