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TAG Heuer Is Wooing Technophiles and Traditionalists With Luxury Smartwatch

Tag Heuer AnnouncementTag Heuer Announcement
The watch display and companion app on the TAG Connected Modular 45. The watch became available worldwide on Tuesday, March 14, 2017. Corey Drayton/Intel Corporation Corey Drayton

Swiss watchmaker TAG Heuer, owned by LVMH, sought to appeal to tech geeks and traditionalists alike on Tuesday by launching a connected watch that lets wearers switch between a smartwatch head and a traditional mechanical movement.

Watch exports fell some 10% last year as sales of traditional Swiss timepieces slowed.

But Jean-Claude Biver, head of LVMH’s watch business (LVMHF), said: “We’re seeing a really spectacular rebound in mainland China, and this, thanks to tourism, is helping other markets as well.”

TAG Heuer’s connected watch looks traditional. But the round watch case, containing the module that displays the time and information from the applications installed, can be unfastened from the watch strap and replaced with a separately sold watch case which looks almost identical, but has a traditional dial instead of a screen and contains a traditional mechanical watch movement.

TAG Heuer is trying to overcome the apparent contradiction between Swiss mechanical watches—powered by gearworks invented centuries ago and designed to last decades—and the latest technology to win new customers.

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Biver, launching TAG Heuer’s second-generation connected watch in Brunnen, was echoing comments by Swatch Group Chief Executive Nick Hayek in a newspaper interview.

Biver said TAG Heuer aimed to sell 150,000 pieces in 2017 and would launch a smaller unisex version in October. Despite an investment of over 10 million Swiss francs ($10 million), the connected watch was profitable, he said, adding TAG Heuer had sold 56,000 pieces of the first-generation connected watch.

Thanks to a technology transfer from partner Intel (INTC), the watch can be assembled in Switzerland, thus qualifying for the traditionally coveted “Swiss Made” label.

Related: Luxury Watchmakers Are Turning to Google to Save Them From Apple

The basic TAG Heuer Connected Modular 45 will cost $1,650 for a watch module based on Google’s Android Wear 2.0 (GOOGL), with a built-in GPS and NFC contactless payment chip. An extra $4,000 can buy a mechanical watch module and a more expensive version is also available.

Market research firm Strategy Analytics estimates that 21 million smartwatches were sold in 2016. During the fourth quarter, Apple Watch (AAPL) took 63% of the smartwatch market, or 5 million devices. Samsung was second with 10%, down from 16% in the year-ago quarter.