Investors are gearing up for this month's rollout of Apple's (NASDAQ:AAPL) new smartwatch. There will be plenty of winners outside of the Cupertino-based tastemaker of consumer tech when the Apple Watch hits the market. The companies making the components will naturally benefit from the incremental sales, and one analyst even showed traditional retailers some love on the thesis that springtime mall sales will get a boost from folks buying the high-tech wristwatches at local Apple Store locations.
However, you don't introduce a pricey gadget without disrupting the business models of others. Let's take a look at three publicly traded companies that aren't going to be too happy about the Apple Watch arrival.
1. Garmin (NASDAQ:GRMN)
Citi downgraded shares of Garmin to sell on Monday, slapping a bleak $42 price target on the shares that suggests the stock will be moving lower in the year ahead.
The Apple Watch debut was cited as a primary reason for the downgrade, eating into Garmin's fitness trackers. Garmin is a company that most of us still associate with GPS devices that helped drivers get around a decade ago, but obviously that market's been drying up over the years. The connected car has made it easier to get around using Bluetooth-enabled smartphones to make it happen.
Garmin's been able to hold itself up by pushing into the great outdoors, arming hikers and runners with devices to help them know where they are and track their activities. Automotive devices now make up less than half of its revenue.
Apple Watch will naturally make it harder for Garmin to stand out in the fitness market. Yes, the Apple Watch surprisingly doesn't offer GPS. It relies on the iPhone to provide that feature, and that's going to be a deal breaker for marathon enthusiasts that don't want to be weighed down by smartphones as they train and compete. However, future Apple Watch generations will likely embrace built-in GPS to compete in this niche of active consumers. Merely waiting for this to happen could be enough to freeze near-term Garmin gadgetry sales to iPhone owners.
2. Google (NASDAQ:GOOG) (NASDAQ:GOOGL)
There are some arguments to be made that Apple Watch will actually benefit Google's globally dominant Android operating system. If the Apple Watch does for smartwatches what the iPhone did for smartphones and the iPad did for tablets, then it will help educate the market that will eventually flock to cheaper Android-fueled wrist huggers. This hasn't happened so far with most of the Android smartwatches failing to generate material buzz.
Making smartwatches popular would also benefit Google's market leadership in online advertising. The smartwatch may be small, but it still represents a new screen for Google to serve up sponsored missives as some app makers try to monetize their programs.
However, things can also go the other way for Google. The Apple Watch, after all, is a way to keep iPhone owners loyal. Folks investing at least $349 for an Apple Watch later this month aren't likely to migrate to Android when it's time to upgrade their iPhones. The Apple Watch -- for now, and possibly forever -- works exclusively with the iPhone. Every person spending $349 or more is making a commitment to the Apple ecosystem. The same can be argued the moment that the first hot Android-exclusive smartwatch becomes available, but that may take time.
3. Fossil (NASDAQ:FOSL)
Apple has put out plenty of gadgetry over the years, but this is its first push into wearable computing.
"The Apple Watch is the most personal device we've ever created," CEO Tim Cook said during last month's media event. "It's not just on you, it's with you."
This is high-tech jewelry, and that's going to take a bite out of the premium wristwatch makers. Fossil could be easy pickings. We're not wearing traditional wristwatches the way that we used to. It doesn't make sense to own a watch when the smartphone in your pocket does that and so much more. Fossil has held up considerably better than its peers, largely on the fashionable merits of its timepieces. Apple Watch's success could change that, especially given the many, many, many reports that paint iPhone owners as more affluent and likely to spend money than Android users.
Fossil is already feeling the pinch. It's probably not a coincidence that earnings fell short of expectations during the holiday quarter -- just after Apple officially announced that it would be entering the smartwatch market -- after several quarters of beating the market. Analysts see sales and earnings declining at Fossil in 2015.
It could get uglier than that if Apple Watch becomes the new trendy wristwatch. A wrist occupied by an Apple Watch isn't going to have room for a Fossil or a Rolex. These will be challenging times for an industry that may have peaked.
Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple, Fossil, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.