Tag Heuer to build luxury smartwatch with Google

The luxury Swiss watchmaker Tag Heuer took the industry by surprise yesterday when it announced a partnership with Google and Intel to develop a top-end smartwatch.

Until now, most luxury watchmakers have resisted the trend towards internet-enabled smartwatches and analysts have suggested that only mid-range watches – up to about £650 – are expected to be affected by the arrival of smartwatches, rather than the brands at the top end of the market.

It came as a surprise then, that Tag Heuer announced at the world's biggest watch fair that it would create "a product that is both luxurious and seamlessly connected to its wearer's daily life". Jean-Claude Biver, who heads the watches division of LVMH – the company that owns Tag Heuer – said that the connection between the 155-year-old Swiss watchmaker and Google was "a marriage of technical innovation and watchmaking credibility". Some have questioned whether building a luxury smartwatch might risk diluting the brand, but Biver told the Financial Times: "We believe that Tag Heuer is an avant-garde brand and our customers belong to the younger generation. There is a demand for luxury connected watches and we want to satisfy that demand."

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The first Tag Heuer smartwatch is expected to launch in autumn 2016 and is thought to include features similar to the Apple Watch including geolocation, health-tracking software and an altitude monitor, Reuters reports.

Biver said that he thought the entry of Apple devices into the market would actually have a positive effect on the top-end brands.

"Apple will get young people used to wearing a watch and later maybe they will want to buy themselves a real watch," Biver said.

Lower-end watchmakers have also had to change their strategy in response to the arrival of smartwatches from Apple and other manufacturers. Last week Swatch, the world's bestselling watch manufacturer, announced plans to include smart functions in its products. Traditional mechanical watchmakers Patek Philippe and Hermes said at the Baselworld watch fair that they currently had no plans to build smartwatches.

"For the moment, Hermes is observing what is going on," Guillaume de Seynes, a managing director at Hermes said. "We still do not know how the smartwatch market will evolve."