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The smartwatch is finally here — and Swiss watchmakers aren’t sure how they feel about it.
Wearables were the hottest trend at the annual Consumer Electronics Show in Las Vegas in January, with industry observers comparing their potential to the introduction of Apple’s iPhone in 2007.
The buzziest new devices are activity trackers and watches that wirelessly connect with smartphones. Among the first out of the gate was Pebble Technology, which raised more than $10 million on Kickstarter for a $150 watch compatible with Android and Apple’s iOS.
The last year has seen launches by Samsung, which unveiled its Galaxy Gear in September (the second generation of which will be known simply as the Gear 2); Qualcomm; Archos; Kreyos; ConnecteDevice; I’m Watch, and MyKronoz, among others.
Last week, Google announced the Android Wear platform for wearables and will team with Fossil, Motorola and LG, among others, on smartwatches that are expected to be introduced by the end of the year.
Speculation is rife that Apple could launch its eagerly awaited smartwatch, preemptively dubbed iWatch, this year.
Analysts forecast the market for wearable technology will explode in the next few years, with BI Intelligence predicting 91.6 million smartwatch units will be sold globally in 2018. With an average selling price of about $100, that translates to a $9.2 billion market by 2018, it noted.
“Many look at the smartwatch as the next tablet, a device that will define its own category and alter the pace of the entire mobile industry,” BI Intelligence analyst Tony Danova wrote in a report published last fall.
“An Internet connection on a wristwatch may seem an optional or even strange frill (calculator watches once seemed cutting-edge, after all). But over time a connection will seem like a no-brainer feature. For example, a multi-time-zone travel watch is a much simpler proposition with an Internet connection,” he added.
Nick Hayek, chief executive officer of Swatch Group, begs to differ — for now.
Swatch was one of the first to introduce a connected watch with the Paparazzi, launched in 2004 in collaboration with MSN Direct, a division of Microsoft. The watch promised wearers personalized information including news, weather and sports via MSN Direct but failed to catch on, due in part to technical issues.
The experience appears to have left a bitter taste for Hayek, who vowed last week he would enter no further collaborations with American firms and said he was skeptical about the current crop of smartwatches on offer.
“The problem is, it’s trackable from NSA, every data, you can know where you are. The second thing is, after one hour of using it, you have to charge it for a week, and the third one is, it’s doing the same thing as the phone. You need Android software, so you don’t seem a smart guy or a smart lady when you wear it,” he said.
“But the Swatch Group has all the technologies and we have the products and we have two brands, Tissot and Swatch, that are privileged to be big players in this market. We have everything, but we don’t try again to be the first one to go out there, because we have [already] been it,” he said.
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François Thiébaud, president of Tissot, said the brand known for its touchscreen T-Touch watches was in fact working on a “Wi-Fi watch,” but it would steer clear of the fitness category, believed to be at the core of the future Apple smartwatch.
“We already have prototypes, but we don’t want to go in the same direction as what is currently on the market, and especially not watches that provide personal information like your heart rate or anything like that, because when you enter the health arena, there are risks attached,” he said.
“If one day someone manages to prove that his heart rate was being displayed as normal when in reality the watch was wrong — well, I would rather someone else deal with that problem, because the lawsuit could be very expensive,” he added.
Purveyors of haute horlogerie timepieces are publicly stoic about the smartwatch revolution. Several luxury brand executives noted hopefully that wearing wrist devices could get younger consumers interested in wristwatches again.
Thierry Stern, ceo of Patek Philippe, said he was aware of market developments but believed the smartwatch was “a completely different world” to traditional watchmaking.
“I do not believe it can compete with mechanical watches in our haute horlogerie segment in terms of emotional value, the shared passion we have making our watches and the passion that our clients have, the aesthetic value and longevity of the object and its long-term value,” he said.
“Another important aspect is the fact that a quality mechanical watch can always be repaired and will keep working as long as watchmakers exist. For us, service is a key value and we are in a position to repair any watch that we produced since 1839. This is really different to the electronic world,” he noted.
If smartwatches are not on the same playing field, traditional watch brands will nonetheless have to get used to sharing space with the new category.
ConnecteDevice of Hong Kong will be present at Baselworld this year with its new Cogito brand, albeit in the smaller hall 4, and MyKronoz has signed up for 2015.
Boris Brault, founder and ceo of MyKronoz, said the Geneva-based firm launched its first two models, ZeWatch and ZeBracelet, in June 2013 and hopes to come to the Baselworld fair next year with a dozen models, including the ZeNano, which allows users to dial a phone number.
“We felt that the Swiss watch industry was clearly not venturing into connected watches,” he said. “We thought, why not try to become the Swatch of the smartwatch sector?”
His aim is to create smartwatches that are first and foremost fashion accessories, though the devices, which are compatible with Android 2.3 and above and iOS 4.0 and above, also have compelling technical features, being among the first to feature an integrated microphone and loudspeaker.
At $69, the brand’s entry price point is similar to Swatch. It delivered 100,000 units last year and aims to hit 500,000 in 2014.
Some retailers have also started marketing the gadgets alongside their more conventional watch offer.
A case in point is Le Bon Marché in Paris, which unveiled a new watch department last June featuring powerhouses like Rolex, Breitling and Piaget alongside La Galerie Imaginaire Horlogère, a space for alternative brands like Slyde, Kubik and ZeNano. There, tech geeks rub shoulders with watch aficionados.
“I think this is something that can really galvanize the market and that will force traditional watch brands to change their positioning — and that’s a good thing,” said Marie Lassagne, watch, fine and fashion jewelry buyer at the Left Bank department store.
“They could aim for a younger target. There are potential customers who are under 35 and want to spend less than 5,000 euros [$6,900]. And they could put across messages other than sports like motor racing and sailing — those traditional themes that are common in watchmaking. You could bring in more contemporary designs, fun dials, real creativity in design and not only in the watch complications,” she said.
However, shifting traditional mind-sets in Switzerland promises to be a tough sell. As Jean-Claude Biver, president of the watches division at LVMH Moët Hennessy Louis Vuitton, noted, a smartwatch has yet to trump a luxury timepiece as a status symbol. “The smartwatch is an information device that tells you that you’ve got mail or a message, whereas a high-quality Swiss mechanical watch is a communication device that communicates to others who you are,” he said.
“It communicates your status, your elegance, your idiosyncrasy, your exclusivity, your taste, your discretion — you see? The watch communicates, whereas the smartwatch informs. It’s totally different.”