By Joelle Diderich
with contributions from Haig Simonian
 on October 27, 2016
Tag Heuer's Connected Watch

PARIS — Data indicating that sales of smartwatches fell sharply in the third quarter may come as welcome news to beleaguered Swiss watchmakers, although one of the industry’s leading figures believes connected timepieces are here to stay.

Jean-Claude Biver, head of the watch division at LVMH Moët Hennessy Louis Vuitton and chief executive officer of Tag Heuer, said it was too early to sound the death knell for smartwatches. “That amounts to sticking your head in the sand,” the outspoken executive, who is considered an authority in watch circles, told WWD.

Shipment volumes fell 52 percent in the third quarter following a 32 percent drop in the second quarter, according to the latest data from market research firm International Data Corporation, or IDC. Apple’s market share fell to 41.3 percent from 70.2 percent during the same period a year earlier, it said.

While some Swiss watchmakers have compared the advent of smartwatches to the quartz technology that decimated the industry in the Seventies, others have reacted by putting out their own connected timepieces to capture a slice of the market.

Tag Heuer launched its Connected watch with Intel Corp. and Google a year ago and Biver expects to sell 60,000 by year-end. The company will unveil a second version, tailored to women’s tastes, at the Baselworld watch and jewelry fair next March and aims to move at least 100,000 connected watches in 2017, he added.

“We are fully behind it. We have smartwatch launches mapped out until 2019,” he said, adding that Tag Heuer has a dedicated office at Intel’s headquarters in Santa Clara, Calif., headed by longtime Intel executive Tom Foldesi.

Referring to the IDC data, Biver said: “When I see numbers like that, it doesn’t make me panic at all. I don’t see any cause for concern, either for us or for smartwatches.”

Although he does not see smartwatches as competing with high-end Swiss brands like Rolex and Patek Philippe, Biver said they do represent a threat to entry-level Swiss watches. Exports of Swiss timepieces fell 10.2 percent between January and September, according to the latest data from the Federation of the Swiss Watch Industry.

“That’s why I am sometimes surprised by the laxity and lack of activity [of other brands]. Their only reaction is to say, ‘Hooray, they sold fewer smartwatches than last year.’ That’s stupid,” he said. “Of course, they are competition. That’s obvious to me, and I think this is only the beginning.”

Biver said smartwatches would evolve so fast that current models would rapidly seem like bulky old mobile phone, with improvements including better autonomy, readability and battery life. “We are in the Stone Age,” he remarked.

Tag Heuer’s next smartwatch will cater to women. “It will be more adapted to feminine wrists thanks to its colors, treatment and materials, and also to a certain extent its size, so there will be two versions,” he said.

Some analysts believe that so-called smart analogue watches, which feature traditional dials instead of touchscreen displays, will take the spotlight in 2017 as brands like Fossil increase the number of smarter models they offer.

Frédérique Constant was the first traditional Swiss watch firm to address this market with its horological smartwatch, launched last year. “In my opinion, we now see the failure of ‘black’ smartwatches,” said Peter Stas, ceo of Frédérique Constant. “People want unique designs and beauty on their wrist, that is the reason Swiss watches sell well. With the horological smartwatch, we keep a sophisticated dial design, diamond-cut hands, and a multitude of designs.”

Stas said sales of the watches were gathering steam and the brand plans to introduce six new references at an event in New York on Nov. 2 with its brand ambassador Gwyneth Paltrow. “This will be the first time we have smaller watches for ladies. We expect significant growth in 2016,” he said.

Jean-Daniel Pasche, president of the Federation of the Swiss Watch Industry, reacted cautiously to the IDC data. “I continue to believe connected watches are not substitutes for traditional watches and that they can coexist,” he said. “They don’t have the same targets and don’t represent the same expectations on the part of consumers.”