Author Archives: Peter Stas

Haute de Gamme

Swiss watches can be categorized in three families: LUXE for watches priced over CHF 8000, HAUTE DE GAMME for watches priced CHF 1500-8000, and ENTRY LEVEL for watches below CHF 1500. Typically brands have most of their models in one segment, for Frederique Constant is that the Haute de Gamme segment. In an article by the prestigious newspaper Le Temps, Frederique Constant was ranked 5th place.

Source Le Temps May 27, 2015

Frederique Constant’s continued growth can be attributed to its long term Accessible Luxury strategy. Frederique Constant offers beautiful watches at an accessible luxury price for younger people and watch enthusiasts who don’t necessarily have thousands of dollars to spend, as well as the more value-conscious customer in all kinds of categories today. The company held this positioning for 25 years and Frederique Constant watches have never deviated from it, so people know what the brand stands for. Unlike some other brands that have changed their strategy or tactics over the years, becoming less credible.

Slimline Moonphase Manufacture FC-705S4S6 – Public Price CHF 3190

See here the overview for the Luxe segment:

Source Le Temps May 27, 2015

Baselworld 2015

Thank you all for the great reactions on our Horological Smartwatches in Basel! We are very happy to see the very positive enthusiasm to the concept that we introduced end February in Geneva, Tokyo and San Francisco. frederique-constant-montre-connectee-cover_0 The Horological Smartwatch is a Beautiful Swiss timepiece with connected functionality. It has all the attributes of a beautiful Swiss watch, characterised by the fact that it is based around a dial rather than a screen. The watches connect to an app on Android or iOS phone, allowing to track activity, measure sleep cycles, and get reminders to be more active if sitting too long. Activity and sleep quality can be seen on a secondary analog dial on the watch face itself. The health benefits of being more active and getting better sleep are well understood. Activity monitoring and sleep tracking are the most successful wearable application of today, used by over 20 million people. We are now combining a beautiful Swiss watch with the advanced MotionX technology platform. Traditional watchmaking uses applied technology (five centuries of research in mechanics), the smartwatch uses embedded technology in the form of dynamic firmware that is in constant communication with the world. It is a long way from the mechanical calibre hermetically sealed inside its case, only to be opened every few years to add a bit of oil. We very quickly realised that we couldn’t do this on our own. So we set up the MMT joint venture with our partner Fullpower. MMT designs the circuits and manages the production of the modules in Switzerland. Fullpower developed the schematic, firmware, the apps and the cloud. MMT offers the technology platform also to other brands in the watch industry.

We have 2+ years battery life, an extremely important advantage compared to other smart watches. We always focus on improving battery life over time and we expect we will see further improvements. For comparison, most popular smartwatches run for less than 12 hours in continuous usage, and the longest lasting smartwatches run for at most a few days before needing to be recharged.

Modules for Swiss Horological Smartwatches have been developed, manufactured, and assembled in Switzerland. MMT is a Geneva based Swiss manufacturer. Modules are made to stringent quality and legal requirements. MMT Horological Smartwatch Modules already meet the new legal requirements for “Swissness” that will become active as of January 1^st, 2017.

Google Methods

Most probably you have recently heard about the new book : ‘How Google Works’. Reviews are rather negative; readers’ expectations should be suitably low. The book however describes interesting themes, some I would like to write about in this post.

Intriguing is the strategy to motivate ‘Smart Creatives’: those intelligent, self-motivated employees who are responsible for coming-up with next technologies, methods, and products. They are those we call true A-Players at Frederique Constant, they are our fuel for growth. We need to hire and retain them. Salary and perks do not motivate them. They seek meaning in their work and approach their careers with a missionary zeal ‘to make a difference’.

Company Culture is essential to retain ‘Smart Creatives’ and ensure continuous fuel for growth. At Frederique Constant our mission is ‘To let more people enjoy luxury’, it is a purpose beyond individual members of our company. It is a purpose that we expect will outlive us. We think of our mission daily.

‘Smart Creatives’ are obviously motivated by Creation, an incredibly important aspect of our innovation strategy. We trust our engineers and watchmakers, we say yes to them as much as possible. We stay flexible in communication and approach. ‘Smart Creatives’ power derives from merit and in-sight, not tenure or salary. We have thirty something watch geniuses assembling Perpetual Calendars with ultra complex patented mechanisms. At other watch manufacturers, only very senior (and old) watchmakers would be allowed to touch such complicated mechanisms. Being involved in creation and manufacturing of high-end luxury watch mechanisms motivates all watchmakers at Frederique Constant.

Another Google strategy that resonates is their approach to product launches: Launch quickly, iterate and don’t be afraid to fail. This is not necessarily the strategy of most Swiss watch manufacturers… At Frederique Constant however, we have never been afraid to jump-in. In 2001, we started to develop our first mechanical caliber with the Watchmaker Schools in Amsterdam and Geneva. Later we added students from the Ingenieurs School in Geneva. Developing and manufacturing our first mechanical caliber was a three year very intense effort with many ups-and-downs. We were driven to create a ‘perfect’ Heart Beat and introduced the first, most simple version in 2004. Ten years later we are an independent Manufacture that created 15 calibers, representing over 25% of our annual turnover. If we would not have started with what looked like an impossible project in 2001, we would never have reached where we are today. Innovation is at our core and a key motivator for ‘Smart Creatives’.

Lastly, Google’s hiring practices are of interest. Hiring processes are extremely important at any company. Companies should pursue versatile ‘Learning persons’ whose private passions suggest dedication and personal pride. Decisions on hiring and promotions should be peer-based, reached by committees of employees instead of individual hiring managers. Keep interviews to the point and revealing.

Results 2014

Frederique Constant Classics Manufacture

We are very happy to report that we have closed the year with 16% sales growth compared to 2013. This is an enormous performance considering that the watch industry exports only grew approximately 2% in 2014. We are very proud on this result! All teams in the company, our distributors, and our retail partners have been working very hard to realize maximum sales in an often-difficult environment. Thank you very much for this hard work!

Not only has the result been good in 2014, very important is also that we have made structural changes last year in our management approach. Aletta and myself have stepped back somewhat from day-to-day operations and this work has been picked-up increasingly by our Management Team. With hard work, help of coaches, planning meetings, and various IT systems, our overall accountability culture has improved significantly. This is very important as it creates a solid base for the future. We thank all at the company for this new way of working.

With more time available, Aletta and myself have been able to focus more on external relations, collection creation, and strategy. Never before have we had our new collection so well developed at this stage, more sophisticated, all details fine-tuned to a new level. Our merchandising strategy is showing increasing strong results.

All this gives us strong confidence for 2015. As always, we have great ambitions and we are sure that we will have another year of excitement and strong growth.

With our target to grow production and sales from 135K to 150K in 2015, we will let more people enjoy luxury. This core purpose is our reason of being and the driver to live our passion.

Thank you for your interest in Frederique Constant, thank you for your support. We wish you an excellent start of the year and are looking forward continuing our journey with you. Together we are strong and together we will be living our passion!

It’s all about Manufacture

Read in the NY Times this weekend:

In the past decade, many Swiss watchmakers, from luxury kingpins such as Vacheron Constantin to mid-market brands such as Frederique Constant, have embraced the notion of becoming manufacturers, a term of prestige that distinguishes companies that make every bit of their watches from those that buy components for assembly and marketing.

Full Article: http://nyti.ms/1BQru0z

Apple vs Swiss Watch Industry Cont.

In my previous post on Apple vs Swiss Watch Industry, we looked at (perceived) short comings of the Apple Watch. This blog post will be about what makes Swiss Luxury watches.

Relevance

The Swiss watchmaking industry is unique in the world. Unsurprising as this may seem, it is undeniable. Despite an unpredictable global economic climate, Swiss watch exports continue to confirm the healthy state of the industry, which has enjoyed successive record years. Swiss watch exports now exceed 21 billion francs annually, representing 54% of the world watch industry.

Swiss Made

Luxury products are mostly about the quality of the item being purchased. Quality refers to the constituent materials used in making the product, the finesse and extent of the craftsmanship involved and the reputation of the brand behind the product. With items such as luxury watches, it is widely known that the best items in this niche are largely made in Switzerland, an area renowned for its watchmaking practices and innovations which have held the attention of those who understand the nature of timepieces for centuries.

Heritage

Most of the world’s best known watch manufacturers are based in the Swiss Jura region. Cross-fertilization between companies as well as co-operation with suppliers enable independent manufacturers to remain at the forefront of precision watch making. Watchmakers are the most important assets of a watch manufacturer, since each watch is individually assembled by hand. Watch making schools in Genève and La Chaux-de-Fonds have educated most watchmakers. Many of them gained experience in the ateliers of renowned watch brands.

Luxury

Swiss luxury watches in general and Frédérique Constant watches in particular are defined by their high quality, differentiation and precision in design and manufacture. We have a passion for designing our beautiful watches. Their perceived value — through quality of design, materials, and manufacture — is a key component of our success. Each of our watches is assembled by hand and extensively controlled with the latest equipment to ensure maximum quality. A customer of a Swiss watch understands the finer details about the intrinsic qualities of luxury timepieces.

At Frederique Constant, our focus is creating luxury timepieces with an intrinsic value usually greater than the offer price of the products being sold. Intrinsic value involves the quality of product both in terms of design, materials used in manufacture and adherence to Swiss watchmaking standards as well as traditions. Our timepieces are exclusively manufactured by hand while the processes involved are regulated with the latest precision equipment available in the industry backed by years of research & development. We recruit passionate watchmakers from time honored watch making schools whose reputations are an intricate part of Swiss watchmaking history.

Manufacture

Craftsmanship can be seen in manufacture animations, seeking to highlight the complexity of a manufacture caliber and other watch key components. Brands are inviting consumers into their manufacturing spaces and seeking to connect them with artisans. The focus for these brands is on design, heritage, craftsmanship and the complexities of creation. An example is this video on the manufacturing of watch dials:

Swiss watch brands tend to distil layers of complex technical information into succinct content. Brands often bring clients into Swiss workshops to visually confirm the expertise necessary to produce beautiful timepieces, and reiterate messages of creativity, quality and excellence.

Longevity

Swiss classical watches are understated, exclusive timepieces, immune to the constructions of age. These are objects of art that can be passed down through generations. Traditions are very important, and what better a gesture than to give or receive a special watch for an important birthday or milestone. A special gift that lasts for generations. The best watches even increase in value over time. Sotheby’s and Christie’s hold luxury timepiece auctions regularly.

Comparison

With all the above in mind, how do we rate the Apple Watch? Or is it something that should not be compared to Swiss Luxury watches at all? Apple states on its website that its watch is designed to be worn during all your daily activities, from morning workouts to nights out. Swiss watch companies develop and design their creations to be precious personal jewels. OK, the Apple Watch certainly looks more refined than prior smart watches being sold in the market, but can it be called a luxury item? It also remains to be seen if the Apple Watch “redefines what people expect from a watch,” per Tim Cook. We will find out in early 2015.

Apple vs Swiss Watch Industry

Let me start with that I am a true admirer of Apple products, the Apple Company, as well as Steve Jobs. With great interest, I studied each page, each sentence, each word, of Walter Isaacson’s biography of Steve Jobs. It is an inspiration for CEOs, innovations teams, creatives, and marketiers. Many times, I have watched YouTube movies of Steve Job’s presentations, a great learning for any presenter. So, nothing but respect for all that is Apple.

Apple has a history of conquering whole industries with new innovative products and services. Any watch industry CEO would be a fool if he or she does not take recent developments seriously. Even if we do not agree with John Ive’s statement that the Swiss Watch Industry is ‘in trouble’, we should all see that the Swiss Watch Industry is under attack and potentially faces major upheaval. A very powerful new competitor is now entering the watch industry. A competitor that plays with entirely different business methods, finances, culture and ambition.

Apple has been hiring watch and fashion industry specialists. To name a few: Patrick Pruniaux, former vice president for sales at luxury Swiss watch maker TAG Heuer, Marc Newson, the renowned and influential designer of the Ikepod watchbrand, and Angela Ahrendts, the former chief executive of British luxury retailer Burberry Group. It is clear that Apple takes the watch segment seriously and they are not shy to bring-in outside specialist knowledge. The question is what the Swiss Watch Industry is doing to learn?

Many of my colleague CEOs have responded in the press that the Apple Watch will be no threat to their business. The Apple watch has been down talked on many occasions and I agree with most of the comments that have been made. Square watches don’t sell, it is still a gadget, there is no longevity, the product is not sexy, and more… Let’s turn this around: What can we learn from this first generation Apple Watch? In my opinion, this will give us an immediate clue and what we can expect in the coming years.

Form Factor
Square watches indeed are not liked by men. However, the Moto 360 shows already that a round smart watch is possible. Definitely needs adjustment on the ‘dead’ display section at the bottom of the screen and the thickness, but we can see it coming already.

Charging
There are many stories that expectation is that the Apple Watch may need to be even charged during the day. We are already not happy that we need to charge our mobile phone every evening, do we want to have to do same every night with our watch? No, so time between necessary charges should be maximized as much as possible. I am sure that engineers are working deeply on this.

Longevity
A watch is for many many years, some brands advertise it is for future generations. This is the opposite with what Apple products are today. Our daughters two year old iPhone 5 is discharging in 3-4 hours, she has been told to buy a new one. We need to remember however that first quartz watches 30 years ago needed to be charged every day also. Today, we need to change the battery every 3-4 years.

The Screen Is Off
Apple Watch’s screen is off most of the time, it will only switch-on by moving the arm. Let’s see how this works in real life alter when first watches are shipped. We should remember however another parallel here. First quartz watches 30 years ago had red LED screens that were off until a pusher was pressed.

Summary

In my opinion, it will be a matter of time until above issues will be improved and finally be solved. This will remove the ‘negative factors’.

In a next blog article, I will describe what we see a watch actually is today and how this ties-in with the upcoming smart watches.

Finally, another article will touch upon the upcoming ‘positive factors’ of smartwatches. This is where I see the biggest threat of the ‘attack’.

Apple Watch Screen

Just preparing an article on Apple vs Swiss Watch Industry and stumbling on the Pulsar LED watches of 1975. See their ‘invention’ on the how to turn the screen on:

Apple boasts: The Apple Watch comes with advanced sensors that turn on the display when a user raises their wrist. How new is that!

PETER STAS

Personal Blog Peter Stas, CEO of Frederique Constant, Alpina Watches and Ateliers de Monaco