Two days ago at Basleworld*, Jean-Claude Biver, who heads the watch division of LVMH, the French group which is the world’s number one player in the luxury sector, announced that one of the group’s brands, the Swiss-based Tag Heuer, had teamed up with two Californian technology companies, Google and Intel, to design and manufacture a smartwatch. This follows Apple’s CEO’s recent announcement at a coporate event held in San Francisco on 9 March that his company would be releasing its much expected smartwatch on 24 April.
What must have come as a particular cause of concern to the Swiss makers of expensive timepieces was the revelation that the Apple Watch would include a luxury model with 18-carat gold, priced between ten to seventeen thousand dollars. Even if it can in no way be considered as an outright declaration of war to the Swiss watchmakers, Apple’s initial foray into the low and medium priced segments of the watch sector must have revived some painful memories here in Switzerland, i.e. of the late 1970s and 1980s when the Swiss watchmaking industry almost disappeared as a result of its industry captains having misjudged the threat posed by quartz movements.
Even though some of the Swiss watchmakers issued only a couple of months ago some rather smug statements about technical issues related to the smartwatch concept (battery life, display, etc) or about what they see as major differences in terms of the target markets, several players over the last few weeks have announced that either they are in the process of developing a smartwatch or they have plans to do so. Many thus believed that product announcements in this segment would be made at this month’s famous Basleworld watch convention (see my previous entry, ‘To move or not to move in the smartwatch segment, that is the question’). They were right.
Although widely expected, the announcement by the Luxembourg-born Jean-Claude Biver of the transatlantic partnership between Tag Heuer and the Californian tech companies Google and Intel is nevertheless a game-changer. More importantly, it is a mistake. This is because Tag Heuer‘s partnership as well as those other smartwatches still being developed for launch in the near future not only will inevitably lead to some cannibalisation of sales, but they will cause people to become used to no longer wearing traditional, mechanical watches** – unless some of the smartwatches indeed turn out to be true hybrids (Reuters reports that Jean-Claude Biver told them of the future Tag Heuer smartwatch that ‘People will have the impression that they are wearing a normal watch’). Still, the biggest mistake is probably that Tag Heuer is helping a predatory firm, Google, to move into a market which the Swiss had put in so much effort to build and maintain at the forefront of technology – e.g. with centres of competence like the Swiss Centre for Electronics and Microtechnology (CSEM) at Neuchâtel.
This shows how desperate some Swiss (but owned by a foreign group) watchmakers are that, this time, they do not end up being outsmarted (or should I say ‘outsmartwatched’) by the new kid on the block.
* I am a traditionalist: I prefer old spellings.
** I do not believe in Mr Biver’s claim that ‘Apple will get young people used to wearing a watch and later maybe they will want to buy themselves a real watch’.
- ‘VMH’s Tag Heuer surfs wave of smartwatch partnerships’, Astrid Wendlandt, Reuters, 18 March 2015
- ‘Battle of the smartwatches: Swiss watchmakers to take on smartwatch big guns’, Samuel Jaberg, swissinfo.org, 10 March 2015
- ‘To move or not to move in the smartwatch segment, that is the question.’ (entry on this blog)
- ‘Swiss watchmaking world – some links’ (entry on this blog)