Nowadays trends of the watch industry allow us to adapt the measurement of our time – we can meet future and fun with the smartwatch or embody eternity and emotions with the mechanical movement. The global watch market, which is dominated by Switzerland, is worth CHF 22,2 billion (as of 2014) while in the awakening smartwatch market, dominant players from the US, S. Korea and China, reached previous year USD 1.291 billion.
Observing the wristwatches through their history, everything started with the mechanical era in 1880, when the first wristwatch was developed. The year 1970 brought quartz watch revolution. In the early 1980s the industry was “saved” by the radical rethink of the wristwatch, under the Swatch concept, which opened door to mass customization making a wrist watch a fashion accessory and an affordable item for collectors. Swatch inspired Smart mini car, among many other things.
In the mid-1990s, Swiss-watch industry benefited from a boom in demand for global luxury goods, which reconfirmed the dominance of Swiss tradition in the watch making industry. The luxury watch industry continuously combine traditional Swiss values embedded in a traditional Swiss product, presenting a reference guide of the crème de la crème in terms of precision, craftsmanship, quality, price, design, tradition, investment value and public recognition.
In the last decade, smart technologies occurred a watch market. With the smartwatch development and its intensive commercialization since 2010 onwards, a certain potential has been identified in the existing watch market. However, there have also been identified many fundamental challenges that the companies should tackle, since the central value component of smartwatches is made up by software and applications.
According to Smartwatch Group, the top 10 companies in sales in 2014 (Samsung, Lenovo / Motorola, LG, Pebble, Garmin, Sony, Fitbit, Withings, Polar, Asus) have a market share of 82%. Around 150 companies in the world have smartwatches in their development pipeline. As stated by Smartwatch Group around a half of all smartwatch companies are based in the US and China, however, there are smartwatch companies also in Taiwan, Japan, Switzerland, Finland, South Korea, Canada, Germany and Italy. An important future role in terms of smartwatch production is predicted for India.
While the benefits in terms of key features of today’s typical smartwatches is relatively low, Smartwatch Group estimated fitness trackers as a successful product category on a basis of last few years, as the tracking of physiological parameters may be the driver of the smartwatch industry and many relevant applications will evolve out of this. In terms of pricing, an average smartwatch costs USD 250, however Apple made a notable change in the price differentiation and smartwatch market positioning. Technology’s luxury brand has this year entering the watch business, with the launch of smartwatch, which the price points from USD 349 to USD 10,000.
A huge global buzz has been created from luxury watchmakers to pure play-tech, about what kind of a challenge the smartwatches presents to the traditional watchmaking. MediaChange wanted to discover, what lays behind the buzz and spoke to some of the most renowned people from the watch and jewelry sector. We provided some highlights right at the world watch and jewelry show, Baselworld 2015, located in the homeland of watches.
As explained Serge Maillard, Managing Editor at Europa Star, watchmaking companies for sure are not going to lose their money, they will just make less money than they used to be. “The margins are very high in the luxury sector as a whole, especially in a watchmaking, especially for the Swiss made watches and the only firm outside of the luxury industry, which obtains the same margin and retails rates as the luxury sector is Apple.” Maillard believes that the main question in that market situation is What watch for what role? “Many young people don’t wear watch today, so maybe these people will wear the watch and hope of many industry leaders is that once they have smartwatch on the wrist or any watch, when they grow up and have more money, they want to have Rolex, Omega or Patek Philippe.” He added: “You want to wear a smartwatch during the day with all notifications or during the night you will wear a Rolex for a cocktail party or another more high-end brand.”
François Thiébaud, the first man and CEO of Tissot, similarly pointed out: “A watch is made to provide time and what is more important, an environment, an atmosphere. And any watch has to last more than a lifetime.”
Caroline Scheufele, Co-President and Creative Director of Chopard emphasized a long-term vision and sustainability of the watch. “You can wear your telephone on your wrist, this is maybe fun, but it is not sustainable and it is not a long-term vision. For sure in a reasonable period of time, a new smartwatch will get to the market and the old ones will just be wasted. Mechanical watch on the other hand always work and it is something that people collect. And it is really about the tradition of watchmaking.”
Aurélie Picaud, Timepieces Manager of Fabergé explained that hard to compare a smartwatch with traditional watchmaking. “The smartwatch is more about marketing, communication and it is more playful, but it will never replace the level of craftsmanship that you can find really in the tradition and observe really luxury.”
Aldo Magada, President and CEO of Zenith believes that connected watches definitely presents a new segment in the market, which will be interesting in a long term. From the long-term perspective Hanspeter Hanschick, Vice President Marketing Watches, Swarovski pointed at a yet unresolved question, what is the real benefit of the product. “I do not believe smartwatches add true value. The technology so far is not really ready. I do not see benefits over a smartphone. I think the battery live is a huge topic: you can only run your watch for 18 hours until you need to plug it again, then I struggle seeing a benefit.”
Tradition and smart tech walking hand in hand. Why not? At Baselworld we found renowned Swiss watch brands that come up with connected watch and smartwatch solutions, participating with the Silicon Valley to develop the software side of a watch. We observed the launch of Alpina Horological Smartwatch, which represents the bridge between Silicon Valley and the Swiss watch industry. Guido Benedini, CEO of Alpina Watches explained that the watch has all the features of a luxury watch: “In terms of materials, finishing, sapphire crystal, you have plug indexes, 2+ years battery life and two hundred meters water resistant. You have a real Swiss watch where you do not rely on the battery charge.” In terms of manufacturing, Benedini explained that the American partner, the company named Fullpower Technologies is based in Silicon Valley. “What they bring to the project is software side, app side and the cloud part.”
There is another interesting collaboration of watchmaking, software and hardware announced, TAG Heuer, Google and Intel joint venture, which is going to be revealed at the end of the year with the launch of a Swiss smartwatch powered by Intel® technology and Android Wear. As explained Guy Sémon, General Director of TAG Heuer: “To create a connected watch you have to be a computer expert. This is about software and we do not have these skills. It is impossible to produce the top advanced electronics in Switzerland and it is the same for software. We are “just” watchmakers. What we know to do is the design, the mechanical movement, we are the top in accuracy, finishing and luxury, but we do not have computer skills in general. That is why we decided to find the best of the best in the market and for hardware Intel is the best, while on the software side it is Google. So we present the top of what we needed to create: the top advanced and fabulous connected watch.”
Weather the creative potential of the luxury watch industry is going to be eternal and emotional or smart and fun in the future, we are going to bring the stories that deserve respect and attention in the times we live in.