Rolex is a godsend to the watch industry. Are you thankful to Rolex for the watch on your wrist? Or are you a churlish ingrate?

I have Rolex to thank for my Grand Seiko SLGA015.

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Like many GS, the SLGA015 has a subtle dial that from a distance looks like a simple matte black dial.  The Kuroshio “Black Current” dial only makes itself known in certain lighting and at certain angles.

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The reason I have Rolex to thank for this watch is that it’s my belief that in the absence of Rolex and Rolex’s unstoppable marketing juggernaut and Rolex feeding the “flex culture” hype and frenzy amongst muggles, like so…

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…there would never have been enough headroom in the industry for the creation of the SLGA015, as well as the creation of the watch on your wrist!

Inability to meet skyrocketing demand 

I once went to a talk given by Ron Conway, widely known as “The Godfather of Silicon Valley.”  

Ron Conway - Wikipedia

Conway had done quite well for himself as founder and CEO of Altos Computer Systems and then Personal Training Systems, both of which he sold in very successful exits.  He then started doing angel investing, and became fabulously wealthy, having invested in the early stages in some of the biggest names in tech - Google, Facebook, Reddit, AirBnB, etc., etc.  During his talk, he recounted a story that has stayed with me to this day.  He said (paraphrasing here), “We all intuitively think that growth in an industry is really good for the incumbent.  I mean, if there’s more demand for the product you make, you’re sitting pretty!  Unfortunately, it ain’t always so.”  

He talked about how in his day, IBM was absolutely dominant when it came to personal computers, and everyone believed that with surging demand for PCs, IBM was positioned to continue to dominate the industry for decades to come.  But, Conway said that one day he had gone to a hardware convention, and everywhere he saw all these different small-time, no-name tech startups with really high quality PC components.  Now, none of the components were as good as IBM’s PC components, but he could see that these small fry were starting to get pretty good at what they did.  And that’s when he had this blinding insight that the industry was growing so quickly that the growth had opened up room for all these different upstarts to get enough market share to begin to invest fixed cost R&D into particular technologies that would soon rival and then surpass IBM’s!  Based on this insight, he realized that the skyrocketing demand in the PC industry would soon doom IBM, because demand for PCs was growing faster than IBM could supply!  Conway realized that as all these disparate component makers’ products got better and better, PC components would soon become entirely modular, that these components would be higher quality than IBM’s in-house components, and that this opened the way for someone to come in and create modular PCs for a much lower price than did IBM.

The Golden Age of Compaq Computers | PCMag

[Compaq…  before Carly Fiorina destroyed it]

That someone ended up being Compaq Computers, which quickly rose to become the largest supplier of PC systems in the 90’s and supplanted IBM. Conway was fast friends with Compaq’s Chairman, Ben Rosen, and the two of them would go on to team up as angel investors and became even more fabulously wealthy than they already were by investing in Google, Facebook, etc., etc., in their earliest stages.

So, what the hell does this have to do with watches?  I think the analogy is pretty obvious.  Now, it ain’t a perfect analogy, and I’m sure we can argue till the cows come home about the nuances of PCs versus watches, etc., etc., but... 

https://www.youtube.com/watch?v=vq4Z8TNV734&t=25s

Broadly speaking, when demand in an industry far outstrips the incumbent’s ability to supply, that creates headroom for competitors to grow, innovate, and capture market share.

The Rolex marketing juggernaut

  • Rolex spends an ungodly sum of money each year on marketing - the figure that’s commonly cited is ~$100M  
  • Here they are with billboards plastered everywhere at the World Ping Pong Championships…
Novak Djokovic braced for 'great battle' as history beckons in Wimbledon  final | The Independent
  • And here at the International Bumper Car Championships...
Rolex And Formula 1 Lovers: Brace Yourselves For Top Speed Performance In  Miami This Weekend
  • And here’s their brand ambassador, Ashton Kutcher…
The style legacy of Roger Federer | British GQ
  • Rolex’s reality-warping marketing machine helps to generate massive demand for luxury watches!
  • Yet, they are unable to supply all that new demand - over the last several years, industry estimates are that Rolex consistently produces somewhere on the order of 1M watches, while global demand has grown by double digits each of those years
  • Invariably, all these newcomers attracted by all those billboards at the World Ping Pong Championships end up being unable to procure a Rolex when they ask for a Submariner and the AD sales associate laughs in their face…  and either they decide, “You know what?  Forget it.  I  guess luxury watches just aren’t for me,” or they decide, “Well, are there other brands?  Hey, what’s this?  [Insert your preferred brand here:  Omega, Cartier, Zenith, Grand Seiko, Breitling, etc., etc.]?  Gosh, I never heard of them before, but this watch looks kinda nice.  Not as nice as a Rolex, of course, but maybe I  can live with one of these thingies for a while, until I get THE CALL

When demand grows faster than an incumbent can supply, all that excess demand ends up getting fulfilled by competitors, who begin to chip away at the incumbent’s market share.  And, now, with enough scale, those competitors can invest in fixed cost R&D and potentially create better product than the incumbent, and over time the incumbent opens itself up further and further to the possibility of getting supplanted.

All the skyrocketing demand for watches over the past several years has opened the way for other manufacturers to release a multitude of amazing watches.  Were Rolex able to supply that demand, is there any way we would have such awesome new releases like the following?

CHRONOMASTER Sport - ZENITH
Hot Take: Omega Goes Green With The Seamaster Professional Diver 300M
Hands-On IWC Pilot Chronograph 41 Mercedes-AMG Petronas IW388108

And that’s why I got the GS SLGA015.  All this new demand opens the way for manufacturers like GS to produce cool new stuff that costs less than the Rolex equivalent, with technology embedded that (just my personal opinion) I consider to be superior!  

Thanks for all your advertising at the World Ping Pong Championships, Rolex!  You helped to make the existence of the SLGA015 possible!  

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I genuflect at the altar of Rolex every morning before putting on my Seiko.

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I think the Hans Waldorf Foundation is comfortable producing a set number of pieces each year that they budget to. No more, no less. They don’t lose sales, but at the same time, they aren’t growing new customers at the same pace. They control their side with prices. Now do they care? Not sure.

Hard to compare them to Compaq, as PCs are a whole different world and Compaq failed to adapt. I grew up in the age of that growth and I never wanted a Compaq or IBM. They were the corporate old persons computer. Whereas Rolex, will always be able to sell the 800k-million watches they make because demand.

All that said, enthusiasts such as yourself and to a different extent me, find and seek out other brands. We know some folks love to take on the personality of their brands, which is weird because brand loyalty tied to one’s personal brand is a strange phenomenon. 

Like you, I am grateful to see others step up and fill the void, but at the same time, when my Rolex AD calls, I may listen. Then again, they just took on GS, which is a slippery slope into a new hi-beat.

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https://youtu.be/2q35PgSXhKg

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Amazing though I think some exceptionally handsome, well cultured, good smelling man with good hair wrote something along those lines a couple months ago. 🤣🤣🤣

Obviously, we agree here 100% (as excellently smelling, great haired men often do). The waitlist means that people start looking for alternatives (and maybe even realize that the alternative is preferable).  Rolex should have choked off demand with sufficient supply when they had the chance.

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Edge168n

Amazing though I think some exceptionally handsome, well cultured, good smelling man with good hair wrote something along those lines a couple months ago. 🤣🤣🤣

Obviously, we agree here 100% (as excellently smelling, great haired men often do). The waitlist means that people start looking for alternatives (and maybe even realize that the alternative is preferable).  Rolex should have choked off demand with sufficient supply when they had the chance.

I agree with you guys since I’m also an excellent smelling, Great hair guy…🍻😉

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horologuitarist

I genuflect at the altar of Rolex every morning before putting on my Seiko.

Every morning...

Genuflecting during the Creed: What, When, Why? — Gottesdienst
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Great case, well built Sir.

Or is it Madam.  

Bravo. 🍻

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AllTheWatches

I think the Hans Waldorf Foundation is comfortable producing a set number of pieces each year that they budget to. No more, no less. They don’t lose sales, but at the same time, they aren’t growing new customers at the same pace. They control their side with prices. Now do they care? Not sure.

Hard to compare them to Compaq, as PCs are a whole different world and Compaq failed to adapt. I grew up in the age of that growth and I never wanted a Compaq or IBM. They were the corporate old persons computer. Whereas Rolex, will always be able to sell the 800k-million watches they make because demand.

All that said, enthusiasts such as yourself and to a different extent me, find and seek out other brands. We know some folks love to take on the personality of their brands, which is weird because brand loyalty tied to one’s personal brand is a strange phenomenon. 

Like you, I am grateful to see others step up and fill the void, but at the same time, when my Rolex AD calls, I may listen. Then again, they just took on GS, which is a slippery slope into a new hi-beat.

My friend, when your AD calls...

The-only-prescription-is-more-cowbell GIFs - Get the best ...
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Edge168n

Amazing though I think some exceptionally handsome, well cultured, good smelling man with good hair wrote something along those lines a couple months ago. 🤣🤣🤣

Obviously, we agree here 100% (as excellently smelling, great haired men often do). The waitlist means that people start looking for alternatives (and maybe even realize that the alternative is preferable).  Rolex should have choked off demand with sufficient supply when they had the chance.

Dayum GIFs | Tenor

Thank goodness that WC isn't like academia or the world of comedy - I totally plagiarized your work.  I mean, I remember at one point, as I was writing this up, thinking, "Oh, in the post, I need to credit @Edge168n, because he's the one who first made this observation."  But, then...  

Squirrel GIF - Squirrel Huh What - Discover & Share GIFs

And I totally forgot!  

Apologies, sir.  Don't have the committee take my tenure away!

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I would argue that demand didn't kill IBM it was a lack of vision. The upper management at IBM couldn't imagine anyone outside of a business using a mainframe or personal computer so they left that market alone. They paid for it dearly. By the time the large ship got turned it was too late.

The second big mistake IBM made was licensing (non-exclusively) DOS from Microsoft instead of buying them outright early on. This created two problems.  The first is that they were now forever relying on Microsoft for their product. The second problem is that it created a market for clones because anyone could get the OS.

Rolex is different because they are pretty much vertically integrated and don't rely on too many third parties for product. No one can make a clone to compete on price. They can make alternatives but they still aren't a Rolex.

The real question will be if demand remains strong as Rolex ramps production (which they are doing). The trick for them will be ramping production just enough so that they fulfil most orders but not all orders keeping the illusion of exclusivity.   

I do not doubt that there is somewhat of a 'halo' effect going on as well. Other brands are definitely benefiting from Rolex's marketing.

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Great post. By not meeting demand others will surely profit. If one wants an Explorer but tired of the wait, they can go pick up an Aqua Terra immediately. This also risks brand loyalty going forward as well as others may return for another Omega offering in the future. 

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Also, Ashton Kutcher is such a dreamboat 🤩

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TimeToRide

Great post. By not meeting demand others will surely profit. If one wants an Explorer but tired of the wait, they can go pick up an Aqua Terra immediately. This also risks brand loyalty going forward as well as others may return for another Omega offering in the future. 

Right?  How many polls were there this week on WC where the question was, "Do I wait a year for [such-and-such Rolex model]?  Or should I get this [alternate brand watch] now?"

I know the plural of "anecdote" is not "data," but nonetheless, when I first got interested in watches, I immediately thought, "I should go get a Rolex," because that's the only brand I'd ever heard of thanks to the World Ping Pong Championships.  AD had empty display cases.  If they'd had an OP41 in silver, I would have bought that watch, and forever more I would have simply bought Rolexes.  But, they didn't have a watch to sell me, and fast forward to today, and I have 12 Grand Seikos and I would never in a million years buy a Rolex!

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Me no get Rolex. Me mad 😡

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@HotWatchChick69 I'm a lot of things:

Rolex Watch GIF - Rolex Watch GIFs