Goshen News, Goshen, IN

Z_CNHI News Service

October 22, 2013

For Swiss watchmakers, not yet time to worry about smartwatches

FRANKFURT, Germany — In the 1970s, Switzerland's watchmakers were almost put out of business when they underestimated the importance of the quartz watch. Though the industry recovered and is prospering, today it faces a new technological challenge from "smartwatches" such as Samsung Electronics's $299 Galaxy Gear.

As with quartz four decades ago, the devices are being met with a shrug. According to a survey by consultants Deloitte, two-thirds of executives in the Swiss industry say smartwatches pose no threat.

"How would you like it if your boyfriend brings you a smartwatch instead of a nice pavé diamond watch?" said Johann Rupert, the billionaire controlling shareholder of Cie. Financiere Richemont SA, which sells watches under 13 brands including Cartier and Vacheron Constantin. "I'm not sure it's going to have a huge impact on classic watches. "

The industry should brace for the arrival of smartwatches, said Andreas Hofer, a partner at Boston Consulting Group in Zurich. Researcher Strategy Analytics predicts global sales of 1 million smartwatches this year and 7 million in 2014. Sanford C. Bernstein forecasts that Apple could see iWatch revenue of $2.3 billion to $5.7 billion in the first year of selling such a device.

Swiss watchmakers "shouldn't say too quickly it's a trend that won't affect them," said consultant Hofer, who checks his iPhone to be on time. "There should be some modesty."

The high-end Swiss watch is so low-tech that from a practical standpoint, it should no longer exist. When battery- powered quartz watches arrived in the 1970s, many consumers abandoned older mechanical ones — both those that require winding and self-winders, which tap energy from the motion of the wearer's wrist.

The number of Swiss employed in the industry fell from about 90,000 in 1970 to just over 30,000 in 1984, and companies decreased from 1,600 in 1970 to 600 today, according to the Federation of the Swiss Watch Industry, a manufacturers' group.

Quartz watches were cheaper and more reliable. Even the most expensive mechanical watches lose several seconds a week and require maintenance every few years that can cost more than two new iPhones.

Despite its continued reliance on centuries-old technology, the industry has fortified itself since the 1980s. Switzerland's exports of timepieces rose 11 percent last year to a record 21.4 billion francs ($23.7 billion), based on wholesale prices, according to the Federation of the Swiss Watch Industry. Exports climbed 8.5 percent in September from a year ago, data from the federation showed today.

Mechanical watches made up a third of revenue in the $58 billion watch market last year, and the segment will expand 33 percent by 2016, researcher Euromonitor International forecasts. High-end Swiss watches can fetch stratospheric prices: Patek Philippe's Sky Moon Tourbillon runs $1.3 million and Franck Muller's Aeternitas Mega 4 is $2.9 million.

"The more you learn about watches, the more you realize there is real know-how behind them," said Gabriel Vachette, 30, who runs a website about watches and owns roughly 20. He got the bug from his father, who has 100.

"You can tell a story with a beautiful watch," Vachette said. "People who buy a Galaxy Gear will get rid of it in a year or two."

Many Swiss watchmakers will likely continue to do well because a smartwatch may often be an addition to a collection rather than a replacement for a $5,000 Rolex, according to Jon Cox, an analyst at Kepler Cheuvreux in Zurich.

"If you're a successful young investment banker you can probably afford to own both a luxury watch and a smartwatch," Cox said. "A Swiss watch really is a statement about yourself so other people can clearly see you're wealthy. You don't get the same 'wow' factor with a smartwatch."

At greatest risk are low- and mid-range brands such as Swatch and Tissot, Cox said. With many timepieces in the $200- $400 price range, they'll often be in direct competition with smartwatches in the minds of buyers.

Samsung's watch "shows nothing new," said Swatch Chief Executive Officer Nick Hayek. Swatch has made interactive watches for 20 years, he said, "and has gained precious experience." Tissot, a Swatch unit whose watches have had electronic touch screens since 1999 and incorporate altimeters and electronic compasses for hikers and divers, has said it will continue adding technology.

Investors are backing the Swiss watchmakers. Swatch and Richemont shares have both outpaced Switzerland's benchmark SMI Index this year, and 20 analysts recommend buying Swatch while none recommend selling the stock.

"So far the concept of the smartwatch is questionable," said Michel Keusch, a portfolio manager at Bellevue Asset Management AG in Kuesnacht, Switzerland, which holds Richemont and Swatch shares among its 2.2 billion francs of assets. "You need to charge it every day. It's a miniature screen. Everybody has a smartphone anyway."

Keusch said consumers may initially snap up smartwatches amid media hype, but that the product may fade like calculator watches did in the 1980s. He says sales may start around 2 million units a year, a fraction of the 1 billion timepieces sold annually.

HTC Corp. is developing a smartwatch that uses Google Inc.'s Android software and can take pictures, according to a person familiar with the matter. The smartwatch will join a growing segment of wearable technology that already includes devices from Samsung and Sony Corp.

History is littered with high-tech watches that are no longer on store shelves. Microsoft formed alliances in 2003 with Fossil and Citizen for watches that could receive information such as news, sports, weather, and stocks. Swatch and Tissot joined the software maker with similar products the following year. By 2008, they had all been pulled from the market.

One Swiss watchmaker embracing new technology is Arny Kapshitzer. His startup, Hyetis, says its $1,200 Crossbow ) a self-winder with a camera and GPS that can pair with phones — is the first Swiss smartwatch. Kapshitzer presented his idea to several Swiss brands, and the few that met with him said smartwatches are just a fad that will quickly die out.

"I don't believe it: I think it's a real market and the future of the watch industry," Kapshitzer said. Swiss watchmakers "are still in a comfortable situation. We're in a situation of resistance to innovation. It's a big mistake."

1
Text Only
Z_CNHI News Service
  • VIDEO: Boston bomb scare defendant appears in court

    The man accused of carrying a backpack containing a rice cooker near the Boston Marathon finish line on the anniversary of the bombings was arraigned Wednesday. He's being held on $100,000 bail.

    April 17, 2014

  • Consumer spending on health care jumps as Affordable Care Act takes hold

    Nancy Beigel has known since September that she would need hernia surgery. She couldn't afford it on her $11,000 yearly income until she became eligible for Medicaid in January through President Barack Obama's signature health care law.

    April 17, 2014

  • The case for separate beds

    The other night I slept on a twin bed in the guest room of the house I share with my husband and our two kids.
    It was the best night's sleep I've had in years.

    April 17, 2014

  • Raw oysters spike U.S. rise in bacterial infections, CDC reports

    Raw oysters, so good with hot sauce, increasingly can carry something even more unsettling to the stomach: A bacteria linked to vomiting, diarrhea and pain.

    April 17, 2014

  • To sleep well, you may need to adjust what you eat and when

    Sleep.  Oh, to sleep.  A good night's sleep is often a struggle for more than half of American adults.  And for occasional insomnia, there are good reasons to avoid using medications, whether over-the-counter or prescription.

    April 16, 2014

  • Doctors to rate cost effectiveness of expensive cancer drugs

    The world's largest organization of cancer doctors plans to rate the cost effectiveness of expensive oncology drugs, and will urge physicians to use the ratings to discuss the costs with their patients.

    April 16, 2014

  • Low blood-sugar levels make for grousing spouses

    Husbands and wives reported being most unhappy with their spouses when their blood-sugar levels were lowest, usually at night, according to research released this week in the Proceedings of the National Academy of Sciences. Missing a meal, dieting or just being hungry may be the reason, researchers said.

    April 16, 2014

  • Screen Shot 2014-04-16 at 12.51.22 PM.png VIDEO: Toddler climbs into vending machine

    A child is safe after climbing into and getting stuck inside a claw crane machine at a Lincoln, Neb., bowling alley Monday.

    April 16, 2014 1 Photo

  • portraitoflotte.jpg VIDEO: From infant to teen in four minutes

    Dutch filmmaker Frans Hofmeester’s time lapse video of his daughter, Lotte — created by filming her every week from her birth until she turned 14 — has become a viral sensation.

    April 16, 2014 1 Photo

  • Victimized by the 'marriage penalty'

    In a few short months, I'll pass the milestone that every little girl dreams of: the day she swears - before family and God, in sickness and in health, all in the name of love - that she's willing to pay a much higher tax rate.

    April 15, 2014

Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
AP Video
Obama Hopeful on Ukraine, Will Watch Russians Flamingo Frenzy Ahead of Zoo Construction Crew Criticized Over Handling of Ferry Disaster Agreement Reached to Calm Ukraine Tensions Raw: Pope Francis Performs Pre-easter Ritual Raw: Bulgarian Monastery Dyes 5000 Easter Eggs Diplomats Reach Deal to Ease Tensions in Ukraine U.S. Sending Nonlethal Aid to Ukraine Military Holder: Americans Stand With KC Mourners Obama Greets Wounded Warriors Malaysia Plane: Ocean Floor Images 'Very Clear' Sparks Fly With Derulo and Jordin on New Album Franco Leads Star-studded Broadway Cast Raw: Two Lucky Kids Get Ride in Popemobile Boston Bombing Survivors One Year Later Sister of Slain MIT Officer Reflects on Bombing
Poll

Goshen City Council member Dixie Robinson is asking residents to make an effort to clean up their yards this spring. The city’s Dial-A-Truck program is available to haul trash away. Do you think there are more unsightly properties in Goshen this year than five years ago?

Yes, I have noticed more problem properties
No, I have not noticed more problems
I think the problems are about the same as always
     View Results