Fri, Sep 12, 2014 page15

• Swiss watchmakers not fazed by Apple

  A NOKIA MOMENT? Analysts said that the industry cannot afford to be complacent, especially firms in the low to mid-end price level, with Swatch seen as the most at risk

  • Reuters, ZURICH, Switzerland and FRANKFURT, Germany
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  Apple Inc’s iPod upended the music industry, and its iPhone knocked Nokia Oyj off its smartphone perch, but Swiss watchmakers breezily dismissed warnings that the technology giant’s new wristwatch gadget could do something similar to them.

  “They are essentially transient products rather than items of enduring value,” one Swiss watch industry expert sniffed.

  Franz Tuerler, owner of a luxury watch store on Zurich’s main shopping boulevard, Bahnhofstrasse, said the appeal of Apple watches would be to a different class of customer who prizes technology over prestige and emotional attachment.

  

  The movement of a Swatch watch is seen through the transparent face of the watch in a Swatch store in Bern, Switzerland, on Feb. 4 last year.

  Photo: Reuters

  “I think the Apple Watch will be successful. But it’s not competition for the classic Swiss watch industry,” Tuerler said.

  While the luxury end of the market might feel itself well insulated from the blast of competition from Apple, analysts are far from convinced that the industry can be complacent, especially at the more affordable end.

  Vontobel watch industry analyst Rene Weber: “[Apple Watch] is the first convincing smartwatch, and we believe it will impact the entire watch industry, but mainly at the low-/mid-end price level.”

  An industry source acknowledged that watches priced between 500 euros and 1,500 euros (US$650 to US$1,950) could feel the pinch.

  Investors have singled out diversified industry heavyweight Swatch Group, which makes 20 percent of its sales in the low and mid-priced ranges, as most at risk.

  Swatch shares traded 2.5 percent lower on the Zurich exchange after Apple spelled out its plans to offer three lines of watches — sport, standard and luxury versions — with prices starting at US$349 and set to ship in early next year.

  Swatch’s shares have lost nearly 18 percent of their value so far this year, lagging an 8 percent rise in the Swiss market index, and analysts cite Apple’s market entry as the main reason.

  The Swiss industry has so far taken a decision not to join, but to try and beat the smartwatch phenomenon. Not a single watchmaker has announced a deal with a technology company to work together on a smartwatch project.

  Swatch has said several times it has all the knowhow to make “smart” watches and does not want to be dependent on a partner.

  Swatch chief executive Nick Hayek said in a recent interview that the company prefers to go it alone with a launch next year of watches with smart fitness functions.

  However, Apple Watch will be sending messages, playing music, and acting as a payment medium on top of health monitoring functions. The danger for the watchmakers is if Apple succeeds in redefining what people expect from a wristwatch.

  Jean-Marc Jacot, chief executive of privately owned Parmigiani, founded in 1996, whose watches sell for an average 30,000 euros, does not see that as a threat.

  “High-end consumers will buy Apple Watch, because it is Apple, but they should not stop buying classical watches. They will have both,” he said.
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