Smartwatches threaten Swiss pride

Aug 31 2014, 15:02 IST
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Smartwatches like Samsung Galaxy Gear and Moto 360 (below) could pose a real threat to Swiss brands. Smartwatches like Samsung Galaxy Gear and Moto 360 (below) could pose a real threat to Swiss brands.
SummarySwitzerland, the headquarters of the global watch industry, is starting to get worried.

Switzerland, the headquarters of the global watch industry, is starting to get worried. The latest smartwatches from Motorola (the Moto 360) and LG have round faces and look just like ordinary watches. Once more models, including Apple’s iWatch, hit the stores, their relatively low price and attractive looks could pose a real threat to the mid-range Swiss brands. One Swiss brand that has the look and feel of a smartwatch and is priced around the same is Swatch. Swatch chief executive officer Nick Hayek says that Swatch has been making interactive watches for 20 years and sees no great threat. Other Swiss brands have been producing watches with electronic touchscreens. Back in the 70s, Switzerland’s watchmakers were almost put out of business when they underestimated the importance of Japanese quartz watches. Though the industry recovered, thanks to Hayek’s father, the legendary Nicholas Hayek, it certainly faces a new technological challenge from the more efficient and attractive smartwatches. Boston Consulting Group has warned the Swiss watch industry that it should brace for the arrival of smartwatches. Current estimates say that smartwatches will achieve global sales of 7 million this year, once Apple hits the market with the iWatch later this year.

Swatch is heeding the warnings. The company said it is introducing fitness functions, a key feature of smartwatches, to its Touch line of digital watches to be launched in 2015. Industry analysts see brands like Swatch as being more vulnerable to the wave of smartwatches than more luxury-focused competitors. They also predict that once the iWatch hits the market, Smartwatches could take away as much as 10% of the sales of Swatch’s entry-level watches and 5% of its mid-range brands, which include Tissot and Mido. Apple will be the real test. The upcoming launch of Apple’s smartwatch could be the biggest challenge Swatch has faced since digital watches upended the market. Earlier this year, Swatch opposed Apple’s attempts to trademark the ‘iWatch’ name in several countries, claiming it was too close to the company’s own ‘iSwatch’. However, the success of smartwatches is far from assured. Internet-linked watches made by Sony and Samsung have had disappointing sales thus far. Yet, technology is what most of the younger generation wants. Another brand that makes wearable smartwatches is Pebble. Their smartwatch was a crowdfunded phenomenon and is reported to have sold over 100,000 units. It has a 1.26-inch LCD screen and

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