Swiss watchmakers, who once dismissed smartwatches as short-lived gadgets, are now racing to grab a share of a fast-growing market
BASEL, SWITZERLAND (MARCH 16, 2016) (HUBLOT) – Swiss watchmakers, who once dismissed smartwatches as short-lived gadgets, are now racing to grab a share of a fast-growing market via technology partnerships and stepping up investments.
Shipments of smartwatches overtook traditional watches in the final quarter of 2015, according to Futuresource Consulting.
While their rapid rise has so far had little impact on Swiss watchmakers, because of the latter’s focus on higher prices, the industry started to look seriously into the potential for luxury smartwatches after the success of the Apple Watch last year.
Now the race is on to grab a chunk of a smartwatch market expected to grow from $1.3 billion in 2014 to $117 billion in 2020, according to researchers Smartwatch Group.
“The success of the connected watch is quite huge and I am very pleased, I’m very very pleased that we entered this market with TAG Heuer in November 2015 with our two partners Intel and Google and thanks to the two partners we were able on the 6th of November to present the first Swiss connected watch capable of the same features, the same applications, the same mail and the most sophisticated connected watch on the market. The only problem is I totally underestimated the potential. We believed we could sell 20,000 pieces in one year and the demand has been 80,000,” said Jean-Claude Biver, CEO of TAG Heuer.
TAG Heuer partnered with U.S. technology firms Google and Intel last year for its TAG Heuer Connected watch, and said the first 15,000 units offered at just under 1,400 Swiss francs ($1,446) apiece sold out quickly.
“The connected watch is an incredible asset for TAG Heuer. It has regenerated the brand, it has given the brand a new dynamic. It has linked the brand to the future. It has linked the brand to the new generation . I have been in this industry for 40 years. It’s my 40th affair in Basel and I believe it’s my business success ever,” said Jean-Claude Biver, CEO of TAG Heuer.
Also at Baselworld, Swatch Group’s Tissot, one of the more affordable brands of the world’s biggest watchmaker, presented its first connected model, the Tissot Smart-Touch, that lets users connect to their smartphone as well as to other external services, such as weather stations.
Thiebaud said the Smart-Touch’s advantages over existing smartwatches were its much longer battery life of up to one year, rechargeable via a solar panel, and the fact the watch continued to function as a “normal” watch once the connected technology was outdated.
The Smart-Touch, whose battery is made by Swatch’s Renata unit, will be available from late autumn or early winter and cost around 1,000 francs.
While most Swiss watchmakers lack the technological skills and distribution network to make and sell smartwatches, tech giants clearly value their know-how in watch design.
Jeweler De Grisogono, for example, teamed up with South Korea’s Samsung Electronics last year, and presented a diamond-studded version of Samsung’s Gear S2 smartwatch at Baselworld, aimed at attracting more women to the category.
Smartwatches are now serious competition and could help to offset losses felt across the industry globally.
The latest figures show sales of luxury Swiss watches have slid. In 2015 exports fell by 3.3 percent, following five years of growth.
The US, the world’s second largest market was down a modest 0.8 percent. Japan fell 1.9 percent. The biggest fall was in China which lost more than 20 percent. Italy was the only country which saw an increase in exports, of 6.4 percent.
“The luxury goods market over the course of the last five to ten years has been heavily driven by the rising wealth in places in like Russia and China. Obviously sanctions on places like Russia haven’t helped. The Chinese slowdown and the backlash against corruption which appears to be going on domestically have also taken the edge off the market and of course the Swiss have been hampered by a very sharp rise in the franc which is obviously hammering export earnings there. All in all the sector faces some difficult times ahead and i would be very surprised if we can maintain the same growth over the next five years as we’ve seen over the past five,” said Peter Dixon, Global Financial Economist at Commerzbank.
According to Futuresource, women account for 60 percent of all watch sales, but only 34 percent of smartwatches.