Swiss Watchmakers: A Goliath in the era of Smartwatches?

Apple dominated headlines this year by turning into the very best promoting watch maker on the planet, outselling all Swiss watch makers (when it comes to revenue). For a watch that started off 4 years back, this is an unparalleled feat. Hassle is brewing for the Swiss watch trade though; sales are dropping, demand is shrinking and watch improvements haven’t saved up with time. These signs portend powerful days ahead. A disruptive reckoning is on the cards for the Swiss watch industry. Though, this wont the primary time they are facing a crisis. The Swiss watch business survived a similar wave in the 70’s with the introduction of quartz watches. Can they survive this one too?

Reports from IDC mark Apple because the king of watchmaking. Q3 2017 marked a historic point where Apple pipped Rolex to take the crown in terms of revenue. To place things in perspective, an Apple watch 4 retails at $600 while an average Rolex commands $6000 for an computerized mechanical watch. Business estimates peg revenues for Rolex at $5B & Apple at $5.4B, annually. All this while Apple watch sales are increasing upwards while the Swiss trade is going through a major downturn. Swiss exports fell 10% in FY18 which followed a similar sample within the last four years.

And they aren’t taking it well.

Swiss watch business incumbents have typically taken a ham handed strategy to disruptive competition. Just have a look at Tag Heuer, whose CEO Jean-Claude Biver first dismissed the Apple watch as a data bracelet and then a yr later rushed into a partnership with Google to get one out anyway. As of Sep 2018, Jean-Claude Biver is now in a non executive operational position resulting from health reasons. Steve Ballmer moment for the watch industry.

To grasp watches and its stints with disruption that you must understand the history of watch making. On the turn of the twentieth century, Swiss watches were recognized to be an inferior low cost knockoff of British and German watches. They have since then come a protracted way.

Textbook disruption comes in waves. The first wave is always new class creation. In this case, the wrist watch was the aha second that married ingenuity and développement d’outillage horloger convenience. The second wave is at all times of scale, where you are taking the product and resolve the dimensions & distribution problem. Industrialization/mass production is at all times the reply to this. The final one is dual forked — you see a piece of the market commoditized with low cost goods till they are finally distrupted by a new category; and another the place prices keep rising and goal a distinct segment market and ultimately turn out to be disrupted.

THE ERA OF WRIST WATCHES

The first wave of disruption got here within the dimension of the devices. Timekeeping equipment was at first a large box with a number of gears, springs and coils. With passing time, there was a powerful client must “take time with them”. Watches naturally discovered their means dwelling on the wrist. You see this pattern all over the place — from automobiles to computers. Big to small.

Watchmaking, specifically in miniature forms started with the Germans who had designed smaller verisons of huge timekeeping pieces and wore them as pin-up dress accessories. This was expanded through horological inventions of the Dutch, Germans, individuals moving to Swiss fleeing French persecution & a period of British industry. Watches on your wrist, as intuitive as it is to us now, was not commonplace in the 18th century.

While the British & Germans had been all about accuracy, it took Breguet, a Swiss watch maker, to design the primary wristwatch, or watches as we know it now. The decrease in measurement meant that watchmaking turned a miniature art-kind that needed precise instruments & finishing. This beckoned the era of wristwatches.