Why it's nearly impossible for Apple to beat Rolex (AAPL)

In Apple's keynote today announcing its new smartwatch, the company claimed that it was the number 2 watchmaker in the world for watch revenue in 2015, right behind Rolex.

Apple touted this as a huge achievement — and it is. But many expected Apple to take the top spot with its irresistible gadgets that have a lower entry point than most of its Swiss and luxury watch competitors.

So how does Rolex keep a giant like Apple — which sells such a hyped-up product — at bay?

"Ultimately, [Rolex is] the king of the watch world. In terms of mass produced luxury high-end watches, the only one that even comes close would be Omega," Ben Clymer, editor of Hodinkee, told us in April. "And they're really not that close at the end of the day."

Rolex is Rolex for a reason. And that reason is the status and reputation the brand has cultivated over its 100 years of existence. Rolex's cult of personality is no accident.

"Actual innovation in the watchmaking field is what propels Rolex to where they are now," Clymer said.

To cement its status, Rolex never stopped inventing. They came up with the first waterproof case, the first self-winding watch, the first watch with a date, and (arguably) one of the first driving chronographs, which is used to measure lap times. On top of these innovations in watchmaking in the first half of the 1900s, Rolex developed a reputation being reliable.

Rolex now touts this history in its advertising, attempting to make customers feel as though they're buying into a legacy instead of just the hottest new thing.

This helps explain why earlier this year, even though a luxury brand report rated the Apple Watch the most talked about luxury watch, Rolex was still rated highest on the "passion index," which measured how favorable that talk was.

The future, however, remains to be seen. With the release of an entirely new watch line, the Apple Watch Series II contains a few much-asked for features, like water resistance and GPS. The Swiss watch industry as a whole is also facing headwinds, though it's tough to say how that is affecting Rolex specifically.

For now, though, the king of watches keeps its crown.

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