Subtle frissons rippled through the Swiss watch industry last month when the Federation of the Swiss Watch Industry (FH) published the latest Swiss watch export shipping statistics. The results showed a continued downward trend, with Swiss watch exports falling more than 3 per cent to CHF21.5 billion (AU$29.6 b) in 2015. However, after two or three decades of very solid double-digit year-on-year gains, is this small market correction really such a surprise?
A shake-out has been on the cards since before the global financial crisis in 2008/2009 but it is now glibly linked to the emergence of the smartwatch in the techno popularity stakes.
Recent headlines shouted, “Smartwatches now outsell Swiss watches…” The news stories, which referred to research released by a company called Strategy Analytics, reported that in the fourth quarter of 2015, 8.1 million units of smartwatches were shipped, compared with 7.9 million units for Swiss brands.
“That’s quite an impressive feat for the smartwatch category, which has gone from zero to hero in little over a year…” one news source stated.
This is well and good but surely one must ask, by what yardstick is the smartwatch such a hero?
Background reading: Smartwatches outpace Swiss watch exports
Firstly, the Swiss shipping figure of 7.9 million units translates to US$6.3 billion (AU$8.4 b) and the smartwatch figure of 8.1 million units equates to US$1.5 billion (AU$2 b) – based on published average prices. So in terms of turnover, the smartwatch is really just a pint-size hero.
Secondly, further clouding the issue is the fact that the Swiss shipping figures include strong performers such as Frederique Constant, Tag Heuer, Mondaine and Alpina. These brands also produce smartwatches so their figures are included in the smartwatch category as well.
Overall, there are about 220 smartwatch models ranging in price from under US$25 (AU$33) through US$2,500 (AU$3,300) (ignoring precious metals). In 2015, Tag Heuer made 20,000 Tag Heuer Connected smartwatches, which sold at US$1,500 (about AU$2,000). These quickly sold out and they are currently in a new production run of 60,000 pieces.
Waiting game
As to whether smartwatches have materially affected Swiss export numbers, for now, we can only ask the questions. Only history’s retrospective can give definitive answers about the erratic swings of buyer choice, which seem to invoke an image of Einstein’s Chaos Theory.
The arrival of the Apple Watch in 2014 has been compared in technical terms with the chaotic introduction of the quartz watch in the 1960s and 1970s. But doesn’t the fact that we should even compare the two suggest a huge gulf of misunderstanding?
Quartz technology represented a comprehensive evolutionary change in the fundamental accuracy – and cost – of universal timekeeping. The smartwatch, however, can’t exist without this quartz technology and is simply not in competition with it.
The Apple Watch – if it is, indeed, really a watch – provides some novel electronic communication add-ons, which will wax and wane with the techno fashions of the day while always offering a watch dial and hands as a secondary boredom alternative.
Is the Apple Watch’s ability to tell the time simply a side-benefit so it can be called a ‘watch’? Is it a watch or just ‘wearable technology’ that coincidentally looks like a watch and tells the time like a watch?
If a cashed-up buyer was presented with the opportunity to buy an Apple Watch or a Rolex Air King, would he set aside the Swiss watch to buy the smartwatch, or simply buy both? Or, more likely, would he ignore the Apple Watch?
Are smartwatch buyers switching from a traditional wristwatch or are they perhaps new to wearing a ‘wrist-anything’?
For now, we can only ask the questions.
The professional commentariat can’t agree on much at all except to confuse these issues and write attention-grabbing headlines, but it would be a foolhardy analyst indeed who could draw any conclusions whatsoever between the small market slippage of Swiss watch exports and the booming introductory sales of the smartwatch wearable technology.
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