Smartwatch vs Swiss watch: the decline of traditional watches

Caya
September 21, 2021

Apple is known for bringing products into the mainstream. However, they are rarely the first to do anything. Instead, they wait and try to be the best, or at least, the most popular. So, how does it stack up in the smartwatch vs Swiss watch battle? First, it's important to understand the context.

Smartwatches have been around for a while. Still, we cannot question the popularity of the Apple Watch. Just look at this hard data:

  • The smartwatch sector is growing at approximately 20% YoY.
  • Furthermore, Apple is the most sold smartwatch, holding over 33% of the market, with the next competitor only at 8%.
  • At the same time, by 2017, you could already find reports that the Swiss watch industry was on a decline, and the pandemic made it a lot worse.
  • Now, as of today, Apple sells more watches than the entire Swiss watch industry. The gap widened in 2019 to 30.7M vs. 21.1M.  That's the number of watches sold.
  • Swiss watches are more expensive, certainly- but Apple watch sales for 2020 were $30.6B. The Swiss watch industry's total exports were $15B.

That's the equivalent to your Rolex, Cartier and Hublot–combined. So there is strong evidence to suggest that traditional watches are a dead man walking. Who would use one in 50 years? Heck, in 20 years. The answer to this question is not that simple. So, in this article, we'll discuss how the conflict of smartwatch vs Swiss watch, and how Apple comes into play.

Smartwatch vs Swiss Watch: a case for Switzerland

An entire industry of high-end watches could go unnoticed unless you are part of the club. For example, I walked next to a $30,000 watch the other day, and I had no idea until my girlfriend pointed it out-and she knows. She used to sell high-end watches for a living.

She hasn't convinced me of the value of a high-end watch, at least not enough to spend my money on one. But, she has taught me the meaning and reasoning behind paying so much money for a watch. So, I'm going to defend the case for Swiss watches.

High-end watches are much, much more than a device to tell time. Instead, let’s think of them as a piece of jewelry,  even art, and craftsmanship. They even are, believe it or not, incredible technology, analog, that is.

The combination of all of those talks about this self-expression benefit. You wear a watch not to tell time, but as an accessory, to express who you are, what you like, what you believe in, and yes, of course, how much disposable income you have.

This article isn't a debate on whether it's correct or not to pay thousands of dollars for a watch. It's just laying the ground for the smartwatch vs Swiss watch battle that I've been witnessing.

Again, the point is that a luxury watch speaks about who you are, just like the car you choose to drive or the clothes you choose to wear. For men, in particular, considering fashion has more limits. For example, we don't usually wear jewelry; the watch is one of the few pieces of jewelry we can use to brag- I mean, to express ourselves through fashion. So, that being said,

A brief history of time(keeping)

The first compact watches appeared in the 1500s, designed and built in the German cities of Nuremberg and Augsburg, often called Nuremberg eggs, and considered jewelry and novelties hanging from your neck.

That style evolved in the 17th century as men began wearing them as pocket watches. These watches were mechanical, which means they had to be wound every 40 hours or so. The winding device stores energy on a spring that gets released slowly to make the watch operate. They were also wildly inaccurate, often losing minutes a day.

We could talk for hours about how technology evolved over the years. For example, in 1702, a Swiss mathematician proposed introducing jewel bearings into the mechanism, often sapphire or rubies. They helped reduce friction on the components, so they lasted longer.

Image for Smartwatch vs Swiss Watch article: a mechanical watch indicating 8:40, with a center of mechanical pinions and jewelry, golden details and a gold chain to carry

The technological contributions of horology

Horology back then was at the forefront of technology, with some of the most brilliant minds of the time working on perfecting this mechanism. As a result, a watch could easily have hundreds of moving parts. Mass production began only until the 1800s in Geneva. Once again, the Swiss earned ground in an industry dominated by the British until then.

Wristwatches first entered military service towards the end of the nineteenth century. There was a need to keep time without the impracticality of synchronizing a military maneuver with a pocket watch.

By the early 1900s, manufacturers had managed to get accuracy down to a few seconds per day. It was at this time that watchmakers like Cartier and Rolex began showing up on the map.

During World War I, watches became an essential piece of technology and transitioned to a mainstream product. Companies like Rolex and Patek Phillipe played a crucial part in developing Automatic-Mechanical timepieces, which are self-winding thanks to a mainspring. The term for this is a complication, but we'll get there in a second because these watches still had their problems.

The Quartz Crisis

In 1959, the Quartz watch entered the market. Forget about the winding. Now, watches worked with battery power and didn't need winding.

Quartz watches use the predictable and very exact oscillation of quartz, which is about 32,768 times per second. That energy gets filtered by a circuit that filters it to get a tick every 1 second.

The vital differences was that quartz watches were way more accurate than mechanical watches at the time. They were also super cheap to produce. All these phenomenons were a part of what historians call the Digital Revolution or the Third Industrial Revolution, with a wave of digitalization and bullish behavior on tech. You can say that this article's question, Smartwatch vs Swiss watch, was born thanks to the leap quartz watches provided.

So much so that the traditional watch industry struggled, known as the Quartz Crisis. From 1950 to 1970, two-thirds of Swiss watchmakers went out of business. So who would buy a watch that you needed to wind, vs. one that was accurate, and cheap, and in the context of the late 20th century, trendy! Ironically, in the future, Swiss watches from those years would go up in value. But, back then, what saved the Swiss was a pivot on their business model, from everyday watches into luxury watches.

Complications: a key part of Swiss watches

When you talk about watch technology, you can't skip the concept of complications. A complication is a watch feature that goes beyond the display of hours, minutes, and seconds, which is considered a simple movement. For example, you have date indications. The mechanism that spins that little date number around can add around 250 extra parts inside your watch.

So, combining all these components and getting them to work accurately can be quite a challenge. Ironically, date complications are just the tip of the iceberg. I say iceberg, again, because this world was utterly unknown to me a few years ago. And there is some fascinating stuff here.

One of the swiss watches on an arm, with a hand holding it, against a dark background
Swiss watches often show their complications

Complications explained simply

Let's go from simple to complex. We have these automatic watches that wind themselves with the movement of the wrist. You can also add a power reserve to them, which keeps them running even if you are not wearing them, and some of them even have a display to show the "charge." Remember, this is a wound spring, not a battery.

A much more complex complication is an annual calendar. It's one thing to have 1-31 on your date dial, which you would have to adjust every month depending on whether the month is 28, 29, 30, or 31 days. But, then, there are the complications that know how many days your month has and that 2/29 only happens every four cycles. And remember, these are just cogs running inside this tiny device.

With time, watchmakers have designed genuinely unique systems to fit in your wrist. For example, some watches can calculate moon phases, sunset, and sunrise (based on the time of year), solar time, time zones, and wait for it, a star chart.

To give you a couple of examples, the Patek Philippe Grand Complication 6102P tracks the rotation of heavenly bodies, so you can essentially look at the configuration of the night sky on your wrist, including the moon phase.

The fantastic thing is there's not a piece of digital tech in this watch, not even a battery. Instead, watchmakers assemble it by hand, and it takes months to complete. It retails for $300,000, and we’ll discuss money in a second.

To wrap on complications, Patek Philippe's Calibre 89 held the title of the most complicated watch globally with a whopping 33 complications. It has 1,728 moving pieces, and it took four years to assemble each of the four samples in existence.

Swiss Watches: Art, Craftsmanship, and Self-Expression

So you choose to buy a luxury watch not because it tells time, nor the date. Instead, you buy it because of what this watch means. Most luxury watches are made by human hands, with incredible precision on a process and a technology that has evolved for hundreds of years. After the Quartz Crisis, the Swiss watch industry sought to differentiate itself by targeting people who appreciated that craft and were willing to pay a premium price for it.

This high price, of course, goes hand in hand with other luxury items such as precious stones and metals, which are common on these high-end watches. Wrapping a piece of tech in boring stainless steel is not the same as using 24k gold, and if you are paying thousands of dollars for it, it's only fair that you ensure it has luxurious materials.

Different watchmakers have, naturally, leveraged the power of their brand to cater to this very niche target audience. So while Rolex tailors more to the mainstream, brands like Ulysse Nardin focus on sailing and brands like Breitling tailor to pilots.

These products often function as collectibles too. As a result, they have substantial resale value, with many models increasing in value as time goes on. And since these are very high-end machines, they often last long enough to be passed on through generations. So if you wear a luxury watch, you are making a statement.

Simps like me won't know what's going on until my girlfriend briefs me, but it's a strong statement about taste and, of course, status for other watch lovers.

Apple and Horology

Apple understood this perfectly when they decided to get into wearables. Before the Apple Watch entered the market, smartwatches were utilitarian: an extension of your phone. However, Apple successfully created a bridge between a tech tool for early adopters and a fashion accessory.

That’s why the first version of the Apple watch had a gold version. Many reports say that the $10,000 Apple Watch Edition was discontinued due to slow sales, but I believe there's more to it. Apple didn’t launch the gold Apple Watch to compete with luxury Swiss watches: paying $10,000 for a piece of tech that will be obsolete in a few years is absurd by any measure. But it succeeded at putting the Apple Watch just a step above the other smartwatches.

It's not a luxury watch, and I think Apple and everyone else understood that, but it's 'not just a smartwatch. It's an accessory. The band and the materials you pick speak about you. It got everyone talking about it. Beyoncé wore one and  it got us to associate, once again, the Apple brand with luxury, when in reality, it is a mainstream product.

There’s still a need for a luxury Apple Watch, like the Hermes Apple watch which goes for over $1,000; it tailors to a different audience than the aluminum watch, just like the iPhone Pro Max and iPhone SE.

Why the Apple Watch is successful?

There is a cult around Apple, not too different from the cult around watches. Most Apple users don't get into an argument about whether their computer is better or provides better value for their buck than a Dell laptop- they will continue to buy Apple products. They do this because they live in an ecosystem where their OS is intuitive and because of what an Apple product says about you.

Other companies have tried and failed to create their ecosystems. Think about the Windows Phone or the Amazon Fire. They went down in flames and, if you want to know more about them, check out our videos on the topic.

That's not to say that Apple is the only one in the smartwatch vs Swiss watch battle. There are many other brands and there are many other battles. Think of Alienware for laptops or Garmin for smartwatches: they have found an audience, and while it's more niche, you couldn't say that Apple is about to kill either company.

Apple has always projected itself as a cool, hip brand for creatives. If you go to Williamsburg, you don't see a batch of Lenovo laptops in the coffee shop. Unquestionably, people buy Apple because of what the brand means, just like people buy Swiss watches because of what they mean.

More recently, the company has focused on Health and Wellness as an additional benefit of wearables. Again, it's not as insanely accurate for high-end athletes like a Garmin watch, but it's great for most people.

So what's next in the smartwatch vs Swiss watch battle?

Price is a vital topic with watches, even the cheaper ones. So, let’s do a point-by-point discussion on it:

  • In the $50 to $500 range, I think there is no way around it; the world will transition to smartwatches soon.
  • Smartwatches are a category for everyone and anyone. It's an everyday watch for the vast majority of the population.
  • At that price range, mechanical watches don't stand a chance. However, I think anybody who has a watch budget between $50 and $500 will transition to a smartwatch in the next 20 years. Mechanical watches in that range will be something like vinyl players: I have one, I like playing it once every other month.
  • Who wins that race depends on brand equity, and Apple is already killing it. Other brands may continue to exist, but Apple is the 'golden standard' of smartwatches, just like Swiss watches are the 'golden standard' of fine watchmaking.
  • In the $500-$1,500 range, you can find a lot of, let's call them, semi-luxury brands.

Is there a mid-range?

The mid-range category needs a bit more explaining. It's a small statement to wear a watch in this range. For most of the population, it’s an expensive watch for most of the population, but not one that's extravagant or inaccessible. But, it speaks about you, a bit of the size of your wallet, without being pretentious.

  • In the case of smartwatches, wearing a watch in this price range also means that you are willing to spend $1,000 every 3-4 years to renew it, which is a chunk of change for many people.
  • Apple already has a head start in this category. So yes, I also think this category will transition to smartwatches soon.
  • Swiss brands that operate in this category are in danger, I believe. Brands like Frederique Constant have given into the hype and started manufacturing smartwatches- but they are a weird hybrid of a watch that doesn't have the craft of a mechanical watch nor the advanced technology of a good smartwatch. Also, it probably won't last a lifetime.
  • The $5,000+ category, to me, is safe from smartwatches. Watches in this category are safe from the hype of smartwatches because people buy those watches for different reasons (luxury, craftsmanship), which is primarily unfeasible for smartwatches to replicate today:
  • Smartwatches are mass-manufactured, so there goes the craftsmanship.
  • So paying $5,000 for a product that will be worth $0 in 5 years is just pointless.

The future of the Swiss watch is safe

That category is safe in terms of differentiation, but the remaining elephant in the room is who many people will continue to appreciate the traits of Swiss watches?

Their audience is already a niche of high-net-worth individuals who appreciate horology. Still, it seems to me that in this fast-paced technological world, the love and appreciation for that craftsmanship are slowly but surely diminishing.

Imagine the world in 50 years. Will 21 million people still want to buy mechanical watches, just like last year. If the answer is no, then the Swiss industry is in trouble. What do you think?

Caya
CEO at Slidebean/FounderHub. TEDx Speaker. 500 Startups Alum. 40-under-40.
MORE STORIES
How Steve Jobs saved Pixar, by almost going bankrupt
Text Link

Steve Jobs saved Pixar, but at a heavy cost. In fact, he almost went bankrupt. Here's the fascinating story of how it happened.

Read More...
What happened to Subway? It’s not only about Jared.
Text Link

What happened to Subway? It's demise is more than just Jared Foegle. Subway fell because of a lot of factors, many of which contributed to its success.

Read More...
© Copyright 2021 Slidebean Incorporated. All rights reserved
Made with 💙️ in New York City + San José, CR