How The Entry Of Traditional Watch Makers Into Smartwatches Will Impact The Category And Apple

It was recently reported that Tag Heuer and Fossil Group Inc (NASDAQ: FOSL) are working toward launching their own Android-based smartwatch. Oliver Chen, analyst at Cowen Group, was on CNBC Monday to discuss how entry of traditional watch makers into smartwatch space will impact the category and in which geographies Apple Inc.'s (NASDAQ: AAPL) Apple Watch will have robust sales.

"Consumers care about sexiness and I think traditional watches really will play a role in the future of smartwatches," Chen said. "We think smartwatches will be a $10 billion market over time, but traditional watches, wearables and the fashion component is really important. So, I think traditional watches can play alongside an Apple Watch as well."

Related Link: What The Economist Thinks Of The Apple Watch

'The Market Should Get Interesting'

On the different roles that a smartwatch plays compared to a traditional watch, Chen said, "I think traditional and luxury is about innovation. So, we will see all these traditional makers playing in this market. Fossil has Michael Kors as well as Tory Burch and Kate Spade, and they are all interested in participating.

"I think the wearables theme will evolve. What I would say from our survey, consumers are worried about battery life, they are worried about pricing and as we look to version 2.0 and ahead, those will be solutions that will be solved. So, the market should get interesting."

Apple Watch Demand Based On Geography

Chen was asked which regions or markets will drive growth for the Apple Watch. He replied, "The long-term story for luxury goods is really emerging markets exposure.

"Luxury goods manufacturers really embrace smartwatch technology. I think that will continue to be true, but if you think about Apple [...] the broad appeal of this brand as the brand transitions to a real experiential kind of brand, that's globally appealing."