• by Agathe Laurent , Op-Ed Contributor, September 17, 2015

Six months ago, Apple introduced its newest product line with the Apple Watch, including a high-end “luxury” version in gold priced between $10,000 and $17,000. Apple’s Tim Cook went to great pains, including bringing in fashion supermodel Christy Turlington, to explain that they were now a true luxury brand on par with the great Swiss watchmakers. Although the company has yet to publish sales data, success of the gold Watch has been questionable. Luxury, fortunately, is more than just design plus marketing power.

Trying a different approach

Just last week, however, “luxury smartwatch” took on a whole different meaning with the presentation of the Apple Watch Hermes, which is a case study in creating a whole new market  luxury segment: luxury wearable technology.

Of course, Apple is not the only major tech player to investigate this area. Tag Heuer (LVMH group) announced in March that it would work with Intel (for hardware) and Google (for software) to develop its own smartwatch design. Mont Blanc has introduced a “smart” E-Strap wristband as a creative way to add technology to its renowned classic watch pieces. Frederique Constant of Geneva has also produced its own “Swiss-made” smartwatch, the Horological Smartwatch.

Other tech companies such as Samsung are improving their mass market smartwatches to give them more design and a touch of luxury. But these, like the gold Apple Watch, are incomplete efforts aimed at urgently occupying the marketing space for luxury wearable tech.

The Apple-Hermes collaboration is different, because it demonstrates both a profound understanding of the luxury market and strong expertise in business partnerships on the part of the two partners.

A profound understanding of the luxury market

Luxury, like trust, is built not bought. And Apple, despite all its resources and its focus on premium markets, cannot pass for a luxury company when it is fundamentally a technology company. (In 2005, Steve Jobs even called it a “mobile devices company.”)

Hermes, on the other hand, is one of the world’s most iconic luxury companies, with 178 years of history to show. By associating with such a prestigious brand, Apple is acknowledging that it cannot compete on every aspect of a true luxury product. This humility and respect for the historical luxury industry demonstrates Apple’s emotional intelligence and sensitivity, and is a good omen for its future in luxury.

Meanwhile, by working with Apple, Hermes is moving toward the future with confidence in its skills and image. Hermes is by no means the most sophisticated watchmaker, but their iconic status and the very image they project has tremendous value, and is not belittled by associating with a mass-market tech product. Their venture with Apple is a prime example of how leading luxury brands can innovate while building on their heritage.

Expertise in business partnerships

Beyond the luxury world, the association of Apple and Hermes is a perfect business case for successful partnerships. First, the two companies share a common DNA focused on quality, user experience in the broader sense, design and excellence. They are both iconic in their respective fields and, therefore, working together not only makes sense but also has a positive effect on both companies. Secondly, they operate with the same level of strategic flexibility — notably strong finances, stable management and a long-term view that enables them to align their objectives with regards to their joint product. Thirdly, their areas of expertise are clearly defined: Apple will produce the watch itself, while Hermes produces the leather wristbands and, just as importantly, the branding and exclusive watch faces. Finally, for both companies, this is presented as a “peripheral,” i.e., just another showcase for their creativity and craftsmanship, thereby reducing the stakes and letting the product speak for itself.

A blue print for the future ?

By carefully aligning on culture, strategy and execution, Apple and Hermes have set a perfect blue print for success in the brave new world of luxury wearable technologies. It will be interesting to see how the competition adjusts to this innovative partnership.