{"id":10767,"date":"2020-02-11T16:34:51","date_gmt":"2020-02-11T21:34:51","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/the-swiss-watch-industry-under-pressure-loses-share-against-smartwatches\/"},"modified":"2020-02-11T17:12:23","modified_gmt":"2020-02-11T22:12:23","slug":"the-swiss-watch-industry-under-pressure-loses-share-against-smartwatches","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/the-swiss-watch-industry-under-pressure-loses-share-against-smartwatches\/","title":{"rendered":"The Swiss watch industry under pressure, loses share against smartwatches"},"content":{"rendered":"

Jean-Claude Biver might be right that watch design comes from Swiss, but sales in the future may, of course, go to Silicon Valley.<\/p>\n

A recent report on watch sales shows that Apple, for the first time, sold more watches than the entire Swiss industry in a year. The report estimates that Apple sold almost 31 million compared to 21 million of the Swiss watch industry, that’s a 36% increase and 13% decline, respectively, compared to 2018. [2]<\/span><\/p>\n

Smartwatches, and especially the Apple Watch, are delivering a better product appealing to younger generations, who want to have a connection with the digital world, and older generations, looking for devices that can help them track exercise and health.<\/span><\/p>\n

The window for Swiss watchmakers to react, and make an impact in this new market, may be closing.<\/span><\/p>\n

Swiss Industry<\/b><\/h3>\n

Almost 50 years ago, the Swiss watch industry was almost destroyed by reacting slowly to quartz technology, believing that people serious about watches would never own an electronic device in their wrist. The industry was only able to go back to business after the development of their own quartz watches and a marketing rescue to reignite the love for mechanical watches. [3]<\/span><\/p>\n

The recent decrease in exported units echos this past. Sales have been decreasing since 2015, and while revenues have been growing, this is only driven by high-end luxury watches, which only represents 8% of the total units exported by Swiss watchmakers. Apple Watch, and other competitors, are eating away the less expensive segments that represent 30% of the revenue for Swiss watchmakers. [4]<\/span><\/p>\n

\"\"<\/a>
Source: FHS. (2020, February 11). Watch industry statistics. Retrieved from https:\/\/www.fhs.swiss\/eng\/statistics.html<\/figcaption><\/figure>\n

Smartwatches<\/b><\/h3>\n

Early players of the smartwatch industry consisted of niche products such as the Pebble, or sport tracking devices like Fitbit. The first real smartwatches were released by Samsung, Motorola and others around 2013. The product that defined the segment was the Apple Watch, released for the first time in April 2015 (coincidentally, the same year that Swiss watches sales started to decline).<\/span><\/p>\n

While the first-generation of smartwatches compromised on performance, battery, and other functions, a fast release cycle improved almost every feature and function, and the results can be seen on a strong 30% growth YoY for the Apple Watch.<\/span><\/p>\n

Consumer behavior<\/b><\/h3>\n

\u201cWe believe,\u201d Mr. Cook said during the 2014 introduction, that the Apple Watch \u201cwill redefine what people expect from its category.\u201d <\/span><\/i>[5]<\/span><\/p>\n

Consumer behavior is also changing. Smartwatches changed the expectations of what is possible to do in a watch, from basic synchronization with phones and their ecosystems (iOS and Android) to advanced health metrics such as performing electrocardiograms on the go. As the population in the developed world grows older, this type of feature increases the adoption of smartwatches. Peter Stast, of Citizen-watches, comments that the \u201caffordable luxury\u201d midmarket is going to suffer against this type of device: \u201cHealth is worth more than prestige.\u201d<\/em> [5]<\/span><\/p>\n

For young consumers it\u2019s not only health or exercise tracking, the importance of connecting with the rest of the digital ecosystem through their phones running iOS or Android is relevant: a suite of services and apps is available only using those two platforms, this forces luxury brands to use the same operating systems, reducing differentiation.\u00a0<\/span><\/p>\n

Response<\/b><\/h3>\n

Reactions by Swiss watchmakers have been mixed. Some of them fear another episode as the quartz revolution that almost killed them. Others see this as an opportunity to expand their brands into more segments. Some brands have released their own smartwatches (the majority with poor results).\u00a0<\/span><\/p>\n

While it is true that a luxury watch is still a status symbol, this may not hold true in the future. Once younger generations get used to having a device that is more practical than beautiful in their wrist, it may be difficult to reignite the love for mechanical ones. Other reasons might explain the decrease in Swiss watch sales, but smartwatches for sure are part of this decline.\u00a0<\/span><\/p>\n

Swiss watchmakers need to be careful and revert this tendency before it\u2019s too late.<\/span><\/p>\n

 <\/p>\n

Sources<\/i><\/span>:<\/strong><\/p>\n

    \n
  1. Bloomberg. (2015, January 19). TAG Heuer Discards \u201cSwiss Made\u201d Label to Take on Apple Watch. Retrieved from https:\/\/www.bloomberg.com\/news\/articles\/2015-01-19\/tag-heuer-casts-aside-swiss-made-label-to-take-on-apple-watch<\/span><\/em><\/li>\n
  2. Strategy Analytics: Apple Watch Outsells the Entire Swiss Watch Industry in 2019. (2020, February 5). Retrieved from https:\/\/news.strategyanalytics.com\/press-release\/devices\/strategy-analytics-apple-watch-outsells-entire-swiss-watch-industry-2019<\/span><\/em><\/li>\n
  3. Forbes. Naas, R. (2020, February 11). Apple Watches Outsell Entire Swiss Watch Industry, But Don\u2019t Ring The Death Bell Yet. Retrieved from https:\/\/www.forbes.com\/sites\/robertanaas\/2020\/02\/07\/apple-watches-outsell-entire-swiss-watch-industry-but-dont-ring-the-death-bell-yet\/#55260dbb78f1<\/span><\/em><\/li>\n
  4. FHS. (2020, February 11). Watch industry statistics. Retrieved from https:\/\/www.fhs.swiss\/eng\/statistics.html<\/span><\/em><\/li>\n
  5. The New York Times. (2019, June 29). Apple Watch Hasn\u2019t Crushed the Swiss. Not Yet. Retrieved from https:\/\/www.nytimes.com\/2019\/06\/29\/fashion\/smartwatches-apple-tag-heuer.html<\/span><\/em><\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

    The hardware and the software will come from Silicon Valley. But the watch case, the dial, the design, the idea, the crown, that part of the watch will, of course, be Swiss ~ Jean-Claude Biver [1]<\/p>\n","protected":false},"author":11450,"featured_media":10768,"comment_status":"open","ping_status":"closed","template":"","categories":[287,498,2626,2625],"class_list":["post-10767","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-apple","category-apple-watch","category-swiss","category-watches","hck-taxonomy-organization-apple","hck-taxonomy-industry-fashion","hck-taxonomy-country-switzerland"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/digital-winners-and-losers-2\/","yoast_head":"\nThe Swiss watch industry under pressure, loses share against smartwatches - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/the-swiss-watch-industry-under-pressure-loses-share-against-smartwatches\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Swiss watch industry under pressure, loses share against smartwatches - Digital Innovation and Transformation\" \/>\n<meta property=\"og:description\" content=\"The hardware and the software will come from Silicon Valley. 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