While Apple and the ever encroaching slew of other smartwatches are generally regarded with disdain among mechanical watch purists, Apple are set to sell about 4 million of them for the September quarter. It is estimated that the Apple watch could generate $2 billion in revenue for what is already the world’s richest company, and it is claimed that while Swiss watch sales steadily decline, Apple watch sales are starting to soar. All of which could mark a major victory for the company that put an ‘i’ in front of phones, pads, and now watches. For it means Apple has successfully entered the hugely competitive watch hardware sector and already made a significant impact.
In fact the way Apple see it, within the span of a single quarter, it has established not merely a new product, but a new industry, with unit sales more than half of total Swiss watch production for the quarter. In the process, Swiss watch exports declined by 7%, with an even greater percentage of decline, around 9.9%, in the critical price range of an Apple Watch. Could this mean Apple is no longer merely a competitor for single companies, but for the entire watch industry?
Maybe, but Apple cannot entirely take the credit for the decline in Swiss watch sales. Several other important market factors have affected sales including reduced consumption in China due to the anti-gifting campaign, whereby expensive Swiss watches were proffered to company executives as inducements, and also the fact that the Swiss franc is no longer pegged to the euro.
Nonetheless, according to the Federation of the Swiss Watch Industry, most of the decline was in the price category of 200-500 Swiss Francs ($210-524), which is the same price category as the Apple Watch. It represents the greatest loss in sales for the Swiss watch industry since 2009. And for this reason, some believe that for the first time, the Apple watch has taken a bite out of the Swiss watch market.
Jon Cox, an analyst at Kepler Cheuvreux is quoted as saying: “Over two-thirds of the value of Swiss watch exports comes from watches retailing on average at USD17,000 each – if you can afford one of those babies you can afford an Apple Watch.”
While Apple continue to get excited, it’s unlikely we will ever see a smart watch crisis in the same way there was a quartz crisis in the 70’s and 80’s. While some major American watch manufacturers such as Fossil has announced an Android smartwatch, and Swiss watchmakers TAG Heuer have one coming out in time for Christmas, it’s important to remember that smart watch technology is always going to be a radically different proposition to an intricately constructed hand polished, beveled, burnished, briolette, guilloche, mechanical watch. Mechanical watches have in-built longevity and sentimental value that spans generations, whereas smartwatches, like computers and cellphones, will be obsolete every couple of years.
But this time around, the Swiss watch industry is determined not to be caught out. By way of acknowledgement of the rise of the smartwatch era, last year Blancpain, which has always remained steadfastly mechanical and traditional, introduced the Montblanc Timewalker Urban Speed e-Strap, with smart technology built not into the watch, but into the strap. Mondaine, Frederique Constant and Alpina also have smartwatch offerings.