The Apple Watch Threat

From Hodinkee

Apple is the big threat. It sold just under 18 million Apple Watches in 2017, according to industry estimates. (Market data companies International Data Corp. and Asymco put the figure at 17.7 million; Creative Strategies estimates 17.4 million. Apple itself does not disclose watch sales data.)

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But it’s not only Apple, IDC estimates that all other producers sold 15.6 million. “The IDC data means there is 47% that is not Apple.”

Indeed, last year’s total sales of 33.3 million smartwatches far exceeded the entire Swiss watch industry’s output of around 25.5 million units. (Switzerland exported 24.3 million watches in 2018, according to the Federation of the Swiss Watch Industry; another 5% were sold in the country itself.)

Concern about the impact of smartwatches on the Swiss quartz-watch market was a factor in our decision to compete in the smartwatch category. Frederique Constant is a leader in Switzerland’s “accessible luxury” category of watches (priced roughly from $1,000 to $4,000). It produces quartz men’s and ladies’ watches for the lower end of the product line.

But that wasn’t the main reason. First of all, we started this in 2015 because I like it. I like the product. I like the innovation part. That’s the driver. I like it because you are adding features to a fine quartz watch, which is inherently a little bit boring, a little bit standing still for at least 25 years already. So now we can add really meaningful features, things we can experiment with, things we can use. I like the apps. And I am increasingly intrigued by what kind of insights we can give to people.

But at the same time, it is a defensive move. I also see clearly that the smart category is going to eat into the quartz category. So, it’s also partly a defensive move. I am very open about that.

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We see the real value of the Horological Smartwatch being its ability to breathe new life into the quartz watch category.

We are very glad we took the leap into smartwatch technology. Smartwatches have become an important niche for the group. In less than four years, they account for 15% of Frederique Constant’s and over 30% of Alpina’s annual revenue.

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