Horo_Traveler
961
You nailed it
This is the fundamental issue. Swiss watchmaking is unfortunately for the most part, an artisanal craft trapped within the unrelenting growth expectations of a public company. I believe public companies have an important role to play, but for arts and crafts I'm not sure this model can beget any good in the long run. Having said that, THE most prestigious major independent brand has succumbed to the growth mantra as well, only to see their brand equity/value trashed in the grey market. Additionally, as an owner of more than a few of their pieces and as a practical American, I can no longer enjoy the abuse of their regressive F-the-customer service turnaround times. If you are not offering innovation or service, your premium value proposition evaporates for your customer.
The smartwatch/fitness watch threat is real as well. In my case, I haven't worn my Swiss mechanical jewels since December last year. It is not an Apple watch, but a Garmin Forerunner 235 hat has relegated my Swiss watches to the bottom drawer, except for Black Tie events. As a runner and fitness buff, there is simply too much functionality in my Garmin to give up my wrist for a time only jewel that can be passed on for eternity, just like a coal burning stove that can still work and be repaired by my grandson's mechanic.
Sorry to be cynical, but there is too much BS and not enough long-term thinking in the Swiss watchmaking industry. If they don't innovate and elevate their service levels, they deserve to be spanked.
The State of the Watch Industry: Swiss Franc, Asian economic slowdown & the Apple Watch!
Since about a year, Watch World is not what it used to be: the industry has been experiencing some unprecedented external challenges. After a long period of continuous record sales, year upon year, a severe and sizeable slowdown and regression of its inte...
Huge thanks Magnus!
It's rare to read something so well written here than your post. I need to spend an hour in the evening, read everything through and start "meditating". My gut feeling, looking at the general global economy, has been that the watch industry is heading tow...
Thanks for the wonderful info!
Interesting to read all the factoids .. Markets are under pressure and I feel more offerings to the same target audience . Hence value for money will come in play whereby manufacturers will have to offer more to get consumers dollars .. Best ,
Amazing thread Magnus.
Pure Purists stuff. Even if studies and market change permanently it is very informative and educational. Many things to follow in the coming months and years. I guess that we'll also get "underground" opinions at baselworld about how people from the indu...
Exchange rates
Magnus, Thanks for your elaborate and insightful post! Just a couple of remarks: If many currencies fall against one other, isn't it better to say that that currency has gone up? The Swiss willingly let the Franc get more expensive in January of 2015 and ...
I have not data available which separates mechanical from quartz watches, unfortunately...
and indeed that would be very, very insightful. I know however that brands like Tissot suffered severely! Best, Magnus
Great and elaborate business report!
What I do not understand however, and this goes for all businesses and industries, is why a decrease in sales is always met with negativism and terms as \'crisis\'. If you have a sustainable business (model) there really isn\'t a problem is there? As long...
Thanks for the extensive report, Magnus. I need to read it again and much more carefully...
Is there a year by year breakdown of mechanical and quartz prices? I am uncertain that smart watches will do more than take a certain share of the lowest cost watches after an equilibrium occurs.
Magnus I must have missed that in skimming. Exchange rates are a factor but...
There are others. An important question is whether new smartwatch buyers will gravitate to mechanical watches? Based on function then maybe cost, I do not see that happening. The other phone users may not see a need for a watch, regardless of the poor acc...
I never
Believed smartwatch buyers will eventually buy into mechanical watches. Smartwatches offers completely different functionality, functions that mechanical watches cannot replicate. This is not like Rolex buyers start to move up to Patek or whatnot.
Macro- and Micro- economic spikes?
Thanks Magnus for your summary. I am trying to understand how it is affected by the coincidental stimulus started by the European Central Bank today. Surprisingly, the stock markets plummeted!?! What value is confidence, I ask? Regards, MTF
At least one manufacturer has already . . .
. . . anticipated your fifth recommendation, Magnus. Omega announced cessation of spare parts to third party suppliers in '14, which went into effect at the end of last year. From now on, those who wish to have their vintage Omegas serviced will be increa...
Could be risky at the same time
Many watchmakers servicing Omegas now cannot do so anymore and it could lead to vintage ones simply disappearing in drawers as opposed to being fixed and worn...
A few comments
First on the decline of the Hong Kong and US markets and the rise of Tokyo and Europe. Currency explains this easily. The Euro is in the tank. So is the Japanese Yen. So Chinese buyers have by and large cut way back on purchases in HK and US (both dollar ...
I echo Jeff's thoughts. Perfectly said.
On a macro level, the thing that is difficult to assess is whether today\'s 10year olds will register in their radar a mechanical watch or whether it will not even register, simply due to lack of exposure in real life or the media. I like to think that th...
Ups and downs
What an essay. And great food for thought. I think the mechanical watch industry is headed for a tough time, but that's not necessarily a bad thing. It will weed out the wheat from the chaff, and force the brands to focus on honest watchmaking. On smartwa...
Lots of food for thought - and no easy answers
Thanks for the elaborate and well argued post! I\'m increasingly wondering if this will end in a Quartz crisis like proportions in a few years...
The market can shrink a lot and still be much bigger than it was ten years ago.
Unfortunately, publicly held conglomerates have to grow, grow, grow every quarter. It's a disastrous business model. Even a big increase over a few years past is not good enough unless there is current growth. Now that the vast majority of Swiss watchmaki...
You nailed it
This is the fundamental issue. Swiss watchmaking is unfortunately for the most part, an artisanal craft trapped within the unrelenting growth expectations of a public company. I believe public companies have an important role to play, but for arts and cra...
Thanks for your feedback as a practitioner on both sides, very valuable insights indeedl!
Your post confirms my (merely driven by gut feeling) impression that the usability aspect as well as the added utility of smart watches can make a difference in modern 'always online' times. Now Apple has proven that a 'gadget' and 'luxury' are not mutual...
The quartz situation cannot be compared with the smart watch coming to the market.
The quartz movement was invented to be more accurate than a mechanical movement. So it was a direct alternative/replacement for a mechanical watch. A smart watch isn\'t. It\'s a totally different product. Their might be a small overlapping of markets, but...
Not the same product exactly
I never understood why some people compare smartwatches to quartz watches, they are not the same thing. Quartz watches were just watches that was invented to be more accurate than mechanical watches like you said, but it doesn't offer anything more than t...
Well...
I think so. At least were I live the younger generation is much more involved and aware with the environment(al problems) than we ever were. So taking that into account I do feel that they are definitely concerned with durability. Regarding watches? I don...
Nice write up and detail analysis.
Mann it took me 5mins to read through on my iPhone and kill some of my spare time. Have a lot of same sentiment with regards to using new materials on watches and watch brands needing to innovate rather coming out with same old grand complication that is ...
Thanks for thr report.
It was only a few years ago the Watch CEOs were not at all concerned about Smart Watches. Consumers would buy luxury watches when they graduate form the Smart Watches. Clearly, this was a train wreck for mechanical watches. The price point of Smart Watche...
Very good article!
Thanks a lot for all the work you put into this excellent post. Personally I really wonder if the Apple watch has a lot to do with it, since I see it more as a toy to have next to a real watch. I have one myself and LOVE it, but it will never, never, neve...