WATCH AFICIONADO
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New NOMOS watches for premieres, podiums, and parties: such as Tangente neomatik nachtblau, depicted here. Find this and other timepieces with the NOMOS swing system and the automatic movement of the next generation now at selected retailers. More at nomos-store.com, nomos-glashuette.com.
EDITORIAL
LEARNING TO DANCE IN THE RAIN by Pierre Maillard, Editor-in-chief
W
hen the printing press began to take off in the 1450s, booksellers, who made a living from selling manuscripts – and quite a handsome living at that – were outraged. Their business would be destroyed! Others were worried about the dangerous new possibilities for subversive ideas to be disseminated on a grand scale. The political establishment immediately sought to control the presses, including by ordering that a copy of every book be deposited in the royal library. The Roman Catholic Church hurriedly drew up its Index of Forbidden Books. And on the back of all this, clandestine workshops and counterfeiters flourished. Any resemblance to the crisis currently being experienced by the press is purely coincidental. Or is it? Is history cursed to repeat itself eternally, in different guises, under the impulse of similar social and economic mechanisms? Today, print is nearing the end of a glorious cycle, during which it had a very big hand in changing the face of the world, and is now seeing all its fundamental assumptions called into question. Writing remains, but it is in the process of shuffling off its mortal coil of paper and subliming into bits and bytes displayed on thousands upon thousands of portable screens. For us at Europa Star*, who have devoted ourselves entirely to the watchmaking industry for almost 90 years, the paradigm shift is twofold. The problems facing print media are curiously similar to those now affecting the watch industry. I’ll paraphrase what I just said about print: “Today, watchmaking is nearing the end of a glorious cycle, during which it had a very big hand in changing the face of the world, and is now seeing all its fundamental assumptions called into question. Telling time remains, but it is in the process of shuffling off its mortal coil – the watch – and subliming into bits and bytes displayed on thousands upon thousands of portable screens.” Like the booksellers of the 1450s, who were thrown into disarray by the arrival of the printing press, watch retailers today are thrown into
disarray by the evaporation of their bricks-andmortar business. The political establishment, which went into a tailspin over the dissemination of dangerous ideas, is today fretting about corruption and, as in China, inspecting every wrist in search of “subversive” watches (subversively priced, that is). The fact remains that bookshops still exist today, and they don’t look likely to vanish any time soon. Books won’t die, because humans are material beings with a sense of touch and smell, with feelings and emotions, who would never be satisfied with a world composed entirely of bits and bytes, the ephemeral and immaterial. But books will change. Watchmakers are hoping that, in the best case, watches will share the same fate as books. The watch is not threatened with extinction. It will change, that is certain, and it will probably become more scarce; but with scarcity comes greater weight, greater value. But if it is to take this route, the watch industry must embrace the inevitable changes, understand where the changes must be made, and manage all this intelligently. We don’t claim to be able to teach watchmakers anything about their business. But we, as “printers”, confronted with a paradigm shift in the press, will make the most of our 90 years as an independent voice to explore new avenues, create new partnerships, build new bridges and examine new possibilities, both material and virtual. We trust you will join us in our new adventure, that you will consider our adventure your own, and that you will agree with the Roman philosopher Seneca when he said: “Life is not about waiting for the storm to pass, it’s about learning to dance in the rain.” We feel this makes a very apt motto in the current climate. Dear watchmakers, dear readers, dear friends: come and join us in Geneva on 18 January 17, during the SIHH, to celebrate Europa Star 90th anniversary. A new chapter is about to be written. For us, for you, and for watchmaking. p * The publishing house now known as Europa Star HBM SA was founded in 1927 by Hugo Buchser, grandfather of Philippe and Pierre Maillard and great-grandfather of Serge Maillard, who is now our company’s CEO.
Featuring this month on:
www.watch-aficionado.com F.P.JOURNE QUANTIÈME PERPÉTUEL (PERPETUAL CALENDAR) WITH INSTANTANEOUS JUMP Perpetual calendar with instantaneous jump. Unidirectional automatic winding. Simultaneous correction of the date and day in one direction, rotation of the day only in the other direction in position 2 of the winding stem. Discreet and secure corrector in the lug of the watchcase for correction of the month and leap year. Central hours and minutes / indication of leap year with centred small hand, 1, 2, 3, in black; L for the leap year in red / day and month at 12 o’clock in 2 apertures / large date at 6 o’clock in double aperture / power reserve at 9 o’clock, power reserve 160 hours+/- 12 hours. Automatic Calibre FPJ 1300-3 in 18K rose Gold (4N). Off-centre 22K Gold guilloché winding rotor. Platinum or 18K red Gold. Diameter 40 or 42 mm. Height 11.00 mm. | www.fpjourne.com
EDITORIAL Learning to dance in the rain COVER STORY F.P. Journe – Time proves him right MARKET FOCUS What’s going on in Hong Kong? U.S. watch market faces new challenges while catering to shifting demands Report on the Italian watch market MOON GALLERY Andreas Strehler, Patek Philippe, Jean-Baptiste Duboule, Parmigiani, Cartier, de Bethune, Arnold & Son, Christiaan Van Der Klaauw, Vacheron Constantin, Frédérique Constant, Urban Jürgensen, Jaeger-LeCoultre, Glasshütte Original, Harry Winston, A. Lange & Söhne, Stepan Sarpaneva BRANDS Louis Moinet – Lunar eclipse Bovet – When Swiss watchmakers and Italian designers meet SMARTWATCHES Focus on smartwatches – from A to Z The smart perspective of Gerald Roden Review of smartwatches STRAPS Watch straps shake off the shackles Chanel – When the strap sets off the watch Hermès – Saddler turned watchmaker All about watch strap Portraits of watch strap makers PRIVATE LABEL Upheavals in the discreet world of the private label LAKIN@LARGE Connected watches: breaking records or is it wind? SPOTLIGHTS Casio G-Shock Gulfmaster: making waves
Read all articles on www.watch-aficionado.com www.watch-aficionado.com is brought to you by Europa Star HBM SA 25 route des Acacias, 1227 Carouge, Geneva, Switzerland, contact@europastar.com For full information on Europa Star click on www.europastar.com ABOUT US and CONTACT US
COVER STORY
TIME PROVES HIM RIGHT Over more than three decades, with unerring consistency, François-Paul Journe has constructed a neo-classical watchmaking approach whose watchwords are balance, harmony, rigour and legibility, the inevitable product of an exemplary coherence between the aesthetic exterior and the technical interior. Time has proven him right. by Pierre Maillard
F
rançois-Paul Journe’s horological journey officially began nearly 35 years ago, in 1991, at the booth of the Académie Horlogère des Créateurs Indépendants (AHCI) in Basel, where he exhibited his first tourbillon, made entirely by hand. Since then he has continued to “make and remake the same watch,” as he explained to Europa Star FIRST TOURBILLON several years later, in 2003, when he had be- POCKET WATCH 1983 come F.P. Journe, invenit et fecit. To lend cre- “Fascinated by the exceptional tourbillon watches that I had had the dence to his comment, he showed us a care- opportunity to admire in my uncle’s fully framed paper napkin, the same napkin workshop, but without the financial on which, in 1994, he had mapped out his means to acquire any, I decided to build my own tourbillon chronomfuture. “Look,” he said. “It’s all there. For the eter. Working with the little experibenefit of my friends, I sketched out everything ence I had behind me, I devoted all my free time to this project and it I wanted to achieve in watchmaking. Look took me five years to complete it. I carefully... here you have the Résonance, crafted every single component as well as the case in gold and in silver. here’s the Octa, there’s the Réserve de Marche, This watch completed in 1982 is still two decades without so much as a wobble. and over there you can see the Calendrier. All part of my collection.” F.P. Journe Through hell and high water, François-Paul the ideas are there, all the future developJourne has pursued his own horological and stylistic course with unswerving consistency, refusing to be ments are sketched out...” This little anecdote is not as inconsequential as it might first swayed by the ostentatious trends and attention-seeking appear; in fact, it goes a long way to explaining why F.P. Journe exaggerations that have dominated the watchmaking scene. has managed to weather the turbulence and excess of the last That is the source of his company’s resilience.
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CHRONOMETRE A RESONANCE
TOURBILLON SOUVERAIN
HARMONY IN FORM AND FUNCTION His watchmaking style can be categorised uncontroversially as “neo-classical” because of its pursuit of a certain stylistic harmony, a formal and functional equilibrium in which, as in classical architecture, the outside is a faithful expression of the inside, just as the arrangement of the interior is dependent upon the exterior. In a watch industry that is constantly striving to make a splash (“faire le buzz”, as they say in French) François-Paul Journe has never strayed from the path he set out on all those years ago. His approach has always remained substantially the same. It invariably begins on paper, where Journe starts by designing... the dial. This is not because the watch’s appearance is dictated by abstract design concerns: it’s because of his quest for what he calls the “equilibrium” of the watch. As he explained in 2003, and continues to maintain today: “I know where I want to go, I know what functions I want to give the watch, I’ve laid out the technical principles I want to follow, but everything starts with the dial. I begin by sketching out the hour and minute hands, then the functions I want to add to the watch. Above all, I’m looking for an overall harmony in the dial, because in my view the dial should be the direct expression of what goes on inside the watch. The harmony I’m looking for is both stylistic and technical, from the outset. It’s not about making it look nice; it’s about finding out what the watch is trying to say, and how to say it. The inside and the
OCTA CALENDRIER
TOURBILLON DES 30 ANS
outside are not two separate aspects. A watch is a coherent whole, and it has just one way of expressing that, and that expression is the watch itself.” Some 25 models later (not counting variations in materials), this rigorous approach has not wavered in the slightest. The consistency of his aesthetic and technical approach provides the perfect explanation for the “timeless” quality of his watches, which are consummate modern classics. Journe himself describes his watches as “tools”, because the legibility of their different functions and displays, their user-friendliness, their wearability and their usefulness remain cardinal values of his watchmaking approach. u
THE OCTA QUANTIÈME PERPÉTUEL WITH INSTANTANEOUS JUMP One of his latest creations, now available in F.P. Journe boutiques in Geneva, Paris, Tokyo, New York, Los Angeles, Miami, Hong Kong, Beijing, Boca Raton, Beirut and soon Kyiv, is no exception to this rule. A glance at the dial tells you everything you need to know about the new perpetual calendar with instantaneous jump: perfect formal balance underpinning optimum legibility and functionality. The new perpetual calendar with instantaneous jump – the 9th member of the Octa collection – differs aesthetically from most other perpetual calendars on the market by its generous apertures for the day and month, and its double-window large date – a characteristic of F.P. Journe watches. The result is that the time and the intuitively placed calendar indications can be read off without any confusion and with the utmost simplicity. Ease of use is also one of the major features of this timepiece, and it’s a key point, given that adjusting perpetual calendars is often something of a brain-teaser and that, generally, midnight adjustments are strictly verboten. Here, all corrections are carried out via the three-position crown, except for the rapid month correction, accomplished with a small hidden corrector lever beneath the lug at 1 o’clock. The wearer can make adjustments whenever he likes, whatever the time of day. No specialised tools or correctors are required, which would in any case risk scratching or otherwise damaging the case. Months with 28, 29, 30 or 31 days are automatically taken into account, and leap years are shown in the centre of the dial under the fulcrum of the hour and minute hands (years 1, 2 and 3 are in black; the leap year is marked with a red L). In order to drive these functions and displays, which take just 16 thousandths of a second to complete their instantaneous jump (a feat that, it is worth noting, took François-Paul Journe several weeks, months even, of testing and minute adjustments, because the large windows require bigger discs, which are consequently heavier to move), the watchmaker used the exclusive Octa calibre 1300.3. This 18-karat rose gold automatic movement was designed from the outset to be able to easily incorporate all the current and future complications planned for the Octa collection. Its off-centre 22-karat red gold rotor has a self-blocking ball bearing sys-
tem that winds the movement in just one direction, ensuring that the slightest wrist movement is maximally exploited to power the slip-spring barrel, giving an effective power reserve of more than 120 hours. The power reserve is indicated by a hand at 9 o’clock on the dial. Available in platinum or 18 karat red gold, with a diameter of 40 or 42 mm, and a red or white gold dial fixed by a steel circle with silver chapter ring, the Quantième Perpétuel with instantaneous jumping replaces the annual calendar model, the Octa Calendrier, which is now a collector’s piece.
IMAGE AND LEGACY It is F.P. Journe’s custom to systematically cease production of old models once a new model is created. With manufacturing capacity limited to 900 watches per year, F.P. Journe has always made a point of limiting production of its successive series, and never producing any additional watches, even in the event of very high demand. In order to reinforce this principle, the Manufacture F.P. Journe recently launched a new service that offers its collectors the opportunity to buy rare watches that are no longer in production. Depending on the (very few) opportunities that arise, and after careful personal study by François-Paul Journe of the watches available at auction or by private sale, the Manufacture buys back its own pieces and refurbishes them fully in its workshops, before offering them once again to its most loyal clients, with a new 3-year guarantee. François-Paul Journe sees this as a way of preserving his heritage, strengthening confidence and retaining control of his company’s image and authenticity. It’s an original approach, which is in perfect keeping with his passionate desire to keep strict control over distribution. “While today you can easily find prestigious watches available at a 40 or 50% discount, you will never see any of my watches on special offer. I’ve spent over 20 years building up my image, and I’m not prepared to jeopardise that on a whim. In my view, much of the current crisis is due to the blindness and greed of many large watchmaking companies. Now, they’re paying for their recent excesses.” Just as he has never been swayed by the currents of fashion, François-Paul Journe refuses to be swayed on this point. Time will prove him right – as it already has. p
WATCH AFICIONADO
| COVER STORY | 7
MARKET FOCUS MARKET FOCUS A Q&A analysis by Julie Petit, Mazars USA Following the slowdown in China starting in 2014, many Swiss watchmakers have viewed the U.S. market as a ‘compensating’ eldorado. Has it really been the case?
WHILE CATERING TO SHIFTING DEMANDS
The U.S. accounted for approximately 28 percent of total watch industry sales worldwide in 2015, which amounted to $11 billion in sales. Swiss-made watches, largely belonging to category of luxury watches, represented about 20 percent of U.S. watch industry sales in 2015. Strong economic performance in the U.S. is expected to drive the watch industry upward in the coming years, and the highvalue watch industry is expected to grow. This trend is very favourable for Swiss luxury watchmakers exporting to the U.S. As the economy improves the sales trends of the luxury watch industry in the U.S. appear to be better than in other regions of the world. However, U.S. and Chinese consumers are different and U.S. growth may not necessarily compensate for the downtrend in sales in China. Swiss watchmakers are also facing other challenges in the U.S. such as growing interest in smartwatches, fluctuating currency exchange rates, and rising use of digital media. The first two months of 2016 saw a decline of exports of 5.4 percent on a yearly basis. How healthy is the U.S. watch market today? The U.S. watch market is facing hurdles of technological advancement and lifestyle changes in its buyers. Time display has become a ubiquitous feature in electronic devices, from coffee machines to cell phones. This has created the perception that owning a traditional watch is
8 | MARKET FOCUS | WATCH AFICIONADO
redundant, which was further solidified by the rise of smartphones. Sales of traditional watches are suffering also because of the lack of additional functionalities other than telling time. Currently, more people in the U.S. own a mobile phone than a watch, and smartwatches are gaining market share, in part because of their ability to provide useful features like thermometers, GPS, altimeters, and mass storage. Not many Swiss manufacturers have adopted this new technology. TAG Heuer has started to launch smartwatches. While sales are still low, TAG Heuer’s watches have been well received in the U.S. watch market and may become a trend. Who are the biggest players in the U.S. watch market today, by price range (local vs. foreign brands)? The U.S. watch industry offers a wide range of choices for its consumers, from high-end Swiss luxury watches costing hundreds of thousands of U.S. dollars, to cheaper watches from Hong Kong priced as low as $4. Most manufacturers focus on a specific segment of the market, distinguished by the price point of their products. Rolex, Omega, Cartier, Breitling, and Patek Philippe are examples of luxurymarket players while Longines, TAG Heuer, Rado, Tudor, Michael Kors are middle-range-market players. Imports from China mostly comprise the lowermarket segment. Although many key players in the industry will not reveal the number of watches they sell, Apple, Rolex, TAG Heuer and Omega are the most popular watch brands in the U.S. Brands rounding out the top ten include Swatch, Michael Kors, Tissot, Breitling, Patek Phillippe, and Hublot. According to 2015 surveys on the biggest players in the U.S., Rolex was the most preferred brand among upper-income teens, i.e. household income more than $107,000. Michael Kors,
Casio and Fossil ranked second, third, and fourth respectively among this group. Apple ranked fifth with five percent of upper-income teens preferring the product. Relatively new brands like Shinola want to revive the American watch industry tradition. Are they succeeding in their endeavour? After the economic slump the slogan “Made in America” caught on with politicians, manufacturers and consumers alike. Brands like Shinola capitalised on this trend and established themselves as American manufacturers of bicycles, watches, and leather goods. Shinola was founded in 2011. Its annual sales amount to about $100 million and Shinola watches sell for between $475 and $1,125. Shinola’s popularity surged after President Obama purchased one of their watches for himself, declaring the company a symbol of American manufacturing bringing jobs back to the country. President Obama even gifted a Shinola watch to former British Prime Minister David Cameron with the seal of the President on it. Shinola’s watches are assembled, crafted and designed in its factory in Detroit, Michigan by around 500 employees. The company failed to meet the standards set by the Federal Trade Commission (FTC) to be called “Made in America”. Shinola is partially owned by the Swiss manufacturer Ronda and procures some of its components from Switzerland. Nevertheless, Shinola is viewed as one of the trendiest watchmakers in America among millennials. Its endeavour has been extremely successful and is taken as an example by other U.S. brands both in and outside the watch market. The American watch giant Fossil is increasingly going digital, to the point that their entire production might consist of smartwatches in five years’ time.
We feel that the appeal of connected watches is bigger in the U.S. than in Europe and could directly bite into the market of quartz watches. Is this directly related to the decrease of Swiss watch exports to the U.S.? How successful are smartwatches in the U.S.? Do traditional watchmakers have to worry? The introduction of smart wearables has raised a heated debate in the industry as to whether smartwatches will nullify the traditional watch market. Approximately one in 20 Americans owns a smartwatch. This segment is expected to grow and may cannibalise sales of traditional watches within the next five years. But it has not been the case in 2016, even if the decline in the export of Swiss watches seems to be related to the increase in sales of smartwatches in the U.S. Smartwatches challenge the under $1,500 traditional watch category for the most part. Depending on the number of apps and features available, most entrylevel smartwatches are currently priced at $120-200, while middle range watches are priced at $300-500. Apple’s most anticipated smartwatch was launched at an entry price of $350. While it was considered expensive by some, the price made adoption of the technology feasible for a broader audience of consumers. The popularity of smartwatches does give rise to more discussions among other watch manufacturers. In 2015 Fossil reported a decline in watch sales of 8 percent. To reverse this trend, the company acquired wearable technology maker Misfit for $260 million and launched its first smart device. In addition to spending on in-store promotional activities, Fossil also announced it has been working on innovative designs and plans to launch 100 smart products in eight of its brand lines by the end of 2016. In 2015, Montblanc launched the e-Strap device. It is a smartwatch combining mechanical timepiece and digital func-
WATCH AFICIONADO
u
| MARKET FOCUS | 9
tionalities. The e-Strap watch meets the highest standards of traditional Swiss fine watchmaking while including an activity tracker and the ability to control a smartphone. The e-Strap, which is sold for around $4,000, can take pictures, receive phone notifications or search for the phone (or the watch) within a range of up 30 metres. Can you assess the reality of the success (or failure) of the Apple Watch? The Apple Watch is marketed as a lifestyle trend. The Apple Watch represented a 5-to-6 billion dollar revenue stream in the U.S. for its first year on the market, based on the known average selling price of around $450 per unit. Seventy-seven percent of Americans who bought the Apple Watch liked the product and found it useful. However, the Apple Watch cannot be viewed as a success when compared it to the launch of the iPhone or other first-generation Apple products. The media were very excited by the launch of the Apple Watch but sales in the U.S. have not been as high as expected. One of the main deterrents causing potential customers to forgo the watch appears to be the price. However, it seems that people are interested in the Apple Watch, and it is viewed as an aspirational, advancedtechnology product. Global adoption may still be further down the road. Online sales seem to already be part of daily life in America, contrary to Europe. How big is this phenomenon related to watches, compared to traditional brickand-mortar retail? Online sales are indeed part of daily life in America. The online watch market can be viewed as risky for both buyers and sellers of luxury watches though, as buyers may unwittingly purchase fake products and sellers face risks to their reputation. Most well-known European companies
10 | MARKET FOCUS | WATCH AFICIONADO
like Cartier, Bulgari, and Baume & Mercier do have an online presence in the U.S. Traditional watch companies follow different strategies. For instance, Omega considers watch buying to be an emotional decision and as such prefers to have physical bricks-and-mortar stores host its transactions. This is reflected in Omega’s more than 300 mono-brand stores worldwide. Conversely, other watchmakers like Fossil follow a different path, viewing ecommerce as an important component to success in the long run. Fossil increased its online focus and reduced its physical presence from 296 stores to 281 stores in 2015. The trend of online sales is stronger for smartwatches than for traditional watches. Companies like Apple have options for both a traditional shop space and an online presence. Apple believes empowering customers and making the buying experience convenient for them are the keys to success in an age where technology changes how businesses are operated. How important is the vintage watch market as well as the second-hand watch market in the U.S.? Conventional auction houses like Sotheby’s, Christie’s, and Antiquorum still dominate the vintage auction market. They are mainly used for high value items, including vintage watches, most of which are sold at high price points, deterring potential buyers. The vintage watch market is a business on its own and represents a small market. Further, to a millennial, vintage has a history, making vintage watches appealing. On the other end, the advent of websites like eBay and Craigslist that encourage people to sell their unwanted possessions has increased interest in pre-owned watches for both buyers and sellers. This has encouraged many new start-ups to create online shops connecting sellers with potential buyers. The recent increase in online marketplaces for pre-owned watches indicates that the number of
second-hand watches for sale has increased. Some of these sites even encourage their buyers to buy new watches from the manufacturer’s shop as they later have the potential to become mint condition, pre-owned watches – complete with original box and papers. What are the main elements that drive the U.S. luxury watch market today: purchasing power, buying mood, or geopolitical events? Purchasing power is a commanding element driving the U.S. market for traditional luxury watches. As young people get older and increase their disposable income, they tend to invest in traditional watches as a symbol of power and money. Owning a Rolex or a Patek Philippe is considered a status symbol. Further, a traditional timepiece has a longer life-span than most smartwatches, making them popular among older generations. Fashion trends also drive the U.S. watch market as watches are seen as pieces of jewellery. About 30 percent of Americans wear a watch as a fashion accessory, and close to a third of women buy watches to complement their wardrobe. The disposability and affordability of many brands make them a popular fashion choice. This product segment denotes an increasing demand for lower cost watches and accessories. Making a stylish statement also drives the smartwatch market. The decision to purchase a smartwatch appears to be a function of popular culture and lifestyle trends. The allure of smartwatches is stronger in younger buyers, which is not surprising knowing that the younger generation has grown up with mobile and smartphone technology. Finally, as the economy improves in the U.S., consumers are becoming more comfortable spending on nonessential items such as watches. The economic situation is definitely an influential driver to take into account for the watch market. p
SMARTWATCHES
Smartwatches are garnering little enthusiasm from Swiss companies, to say the least. Brands feel ‘forced’ to get involved, without any real appetite to do so (apart from the enthusiasm shown by TAG Heuer’s Jean-Claude Biver, but we wouldn’t expect anything less from him). The fact remains that this unstable market is in the process of establishing itself in parallel to the mechanical watch and directly on the territory of the quartz watch. A diverse range of offers has sprung up since last year. We take stock of the situation as it stands.
CITIZEN 3%
by Serge Maillard
T
he smartwatch market, which really flourished – both in terms of image and sales – following the launch of the Apple Watch in April 2015 after several years of simmering, is now showing mixed results a year and a half later. Nevertheless, we are beginning to get a better understanding of its nature. On the one hand, with estimated sales of more than 11 million units in 2015 according to market research firm IDC (a figure that should be taken with a pinch of salt, as Apple is yet to release the exact figure for the watch separate from the results of other products in the category), the Cupertino firm is the second biggest watch company worldwide. This places it directly behind Rolex, with a turnover of around 4.5 billion francs, according to the slightly provocative ranking of Swiss bank Vontobel (see table) and Tim Cook’s last keynote speech. Another smartwatch brand, Fitbit, (although the majority of their sales are of fitness bracelets), is in fifth position with a turnover of 1.8 billion, between Cartier and Patek Philippe. On the other hand, the ‘emotional’ passion – historically one of the keys to success for Apple – that we might have expected for this product category has been less pronounced than expected. The iPhone and iPad have become real technological icons of our era, even though sales of the former have declined for the first time. Meanwhile, the Apple Watch is, for the time being, far less mainstream, and its results remain modest in comparison with the 231 million iPhones and 55 million iPads sold last year. Although we should nevertheless remember that while some are quick to talk of ‘below-par performance’, these figures would excite many watch companies. The customer experience is often disappointing and it’s highly likely that a considerable number of smartwatches end up
FITBIT 4% LVMH/BULGARI 4%
WATCH INDUSTRY INCL. SMARTWATCHES CHF / WEARABLES: MARKET SHARE 2015 Source: Vontobel Equity Research
FOSSIL 5% APPLE WATCH 10%
OTHERS 36% ROLEX 10%
RICHEMONT 12%
SWATCH GROUP 16%
APPLE AND FITBIT ALREADY IN TOP 5 COMPARED TO SWISS WATCH BRANDS If we compare the top 10 Swiss watch brands and include the leading smartwatch producers, Apple (estimated sales 11.6 mn units/USD 400 average price) ranks no. 2 with sales of CHF 4.5 bn (Vont E) and Fitbit no. 5 (sales of USD 1.86 bn, +149%). If we add up the estimated worldwide watch market (CHF 38 bn) with the smartwatch/wearable market (CHF 9 bn), the three Swiss companies Swatch Group, Richemont and Rolex still hold the no. 1-3 spots, with Apple placed no. 4 (10% share) and Fitbit no. 7 (4% share). 4,900 ROLEX 4,500 APPLE WATCH 2,060
OMEGA
2,010 CARTIER 1,784
FITBIT
1,320
PATEK PHILIPPE
1,260 LONGINES 1,060
TISSOT
805
AUDEMARS PIGUET
775
IWC
725 TAG HEUER 715 SWATCH
in a drawer or back on sale a few weeks later as a result of disappointment or loss of interest in a product that remains a simple extension of the smartphone and that is yet to find its killer app (the author can attest to this). ‘Personally, I only kept my Apple Watch for two weeks,’ admits René Weber, the author of the Vontobel report. Is it in fact just a duplicate device costing the same as a smartphone?
SWISS WATCH BRANDS/ SMARTWATCH AND WEARABLE LEADERS IN COMPARAISON (sales 2015, CHF mns, Vont E) Source: Companies, Vontobel Equity Research
‘Over a year since the release of the Apple Watch, there are still many question marks hanging over the smartwatch, and few answers. For the time being, we cannot say that it has had a notable impact on the low end of the market, as this is the segment that best endured the market in 2015,’ notes Jean-Daniel Pasche, president of the Swiss Watch Industry Federation. u
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ANOTHER MARKETING SUCCESS FOR TAG HEUER This burgeoning market, which currently represents just 1.5 per cent of global watch production, is nevertheless showing naturally strong growth of 224 per cent more than the first quarter of 2016. Apple is the giant in this category, with more than half of the market share, ahead of Samsung, Fossil, Casio, Garmin and TAG Heuer.
2Q16 MARKET SHARE
2Q15 UNIT SHIPMENTS
2Q15 MARKET SHARE
YEAR-ON-YEAR GROWTH
1 APPLE
1.6
47%
3.6
72%
-55%
2 SAMSUNG
0.6
16%
0.4
7%
51%
3 LENOVO MOTOROLA
0.3
9%
0.2
3%
75%
4 LG ELECTRONICS
0.3
8%
0.2
4%
26%
5 GARMIN
0.1
4%
0.1
2%
25%
OTHERS
0.6
16%
0.6
11%
-1%
TOTAL
3.5
100%
5.1
100%
-32%
VENDOR
2Q16 UNIT SHIPMENTS
TOP FIVE SMARTWATCH VENDORS, SHIPMENTS, MARKET SHARE AND YEAR-ON-YEAR GROWTH, 2Q 2016 (units in millions)
Source: IDC Worldwide Quarterly Wearable Device Tracker, July 21, 2016
Note: Data only includes smartwatches capable of running third party applications on the device itself. Examples include Apple Watch, Moto 360, Gear S2. Devices like the Fitbit Blaze and Withings Activité are excluded since IDC considers these as “Basic Wearables” that do not run third party applications.
Director Jean-Claude Biver has pulled off another of his customary strokes of marketing genius by positioning the historic Swiss brand as a quality alternative to the Apple Watch, following the grand launch of the Carrera Connected in New York (200,000 pieces expected in 2017, a third of total sales), particularly in the minds of American consumers. They represent a market with high potential where sales of smartwatches are already having an impact on the results for quartz watches, Swiss or otherwise. It’s a factor that the Fossil Group is well acquainted with, following the vast operation it has launched to target this market. Probably sensing a near-miss, at Baselworld the group announced the launch of a hundred or so smartwatches for its various licensed brands. The world’s fourth leading watchmaker could even soon exclusively produce smartwatches, following the buyout of high-tech firm Misfit. Some high-end brands, hoping to attract new generations of purchasers, are seeking to associate their image with this budding market, despite the inherent planned obsolescence that contradicts the spirit of the mechanical watch. Montblanc made an impression last year with the smart bracelet it presented at the SIHH but this has since seemed to go below the radar. However, it’s the traditional and affordable quartz watch segment (accounting for 97.5 per cent of watch production worldwide) that is most imminently threatened by new smartwatch producers. Unlike the Fossil group, Swatch Group is yet to launch a real full-scale offensive in this niche or to partner with one of the major players from the smart ecosystem. For René Weber from Vontobel, it’s likely that a large number of quartz watches will incorporate at least a smart module in the years to come.
NOKIA ENTERS THE FRAY ‘We expect to see major developments in the near future: smartwatches that really look like watches, easier-to-use interfaces, applications to rival those found on smartphones,’ says Ramon Llamas, head of research at IDC. While the customer experience can be disappointing with current models, smartwatches still hold great potential for improvement. One of the most promising areas is without doubt that of health monitoring tools. This is exactly why Nokia purchased the French smartwatch company Withings. After missing the boat with the smartphone, the Finnish company is focusing on medical technology. This is a huge market in our ageing society, in which smartwatches could represent one of the most interesting tools. Insurance companies are watching closely... But will smart modules remain confined to watches, when we’re hearing more and more about smart clothes, glasses, bracelets and headphones, not to mention chips implanted directly under the skin? The smartwatch is part of the larger environment of the Internet of Things, covering everything from connected fridges to robots. According to IDC, the wearables market alone (mostly smart bracelets for the time being) is expected to reach some 110 million units between now and the end of the year, equating to 40 per cent growth compared to last year, and this will rise to 237 million in 2020. How many watches will be among these hundreds of millions of units? That’s the question being asked of the fledgling smartwatches presented since last year. p
Read our full report online on www.watch-aficionado.com including our Review of Smartwatches from A to Z; Smart Perspectives by Gerald Roden and our report on MMT, a Swiss engineered connected alternative.
14 | SMARTWATCHES | WATCH AFICIONADO