High-end Swiss watchmakers are dismissive of the digital threat, writes Aresh Shirali from Basel
Aresh Shirali | 31 Mar, 2016
AT FIRST ACQUAINTANCE, THERE IS SOMETHING of a wax art party in the air at Baselworld, the high-glitz watch fair held in this Swiss city every spring, reminiscent of gatherings of fancy candlemakers a century or so ago, after Edison’s light bulb turned the basic point of their product obsolete. Today, time is best kept by telecom networks. If you forget your phone at home, you go back to get it. And Apple, a company that has turned almost every market it’s ever entered inside out, has taken explicit aim at wristwatches. It has no pavilion at Basel for the watch it unveiled last year, one that works in sync with its phone, but, curiously, nobody here seems to care. A wrist gizmo, goes the majority view, is just not the same as a wristwatch—so why fret?
A Swiss watch, after all, is a Swiss watch. According to figures put out by the Federation of the Swiss Watch Industry, however, business is down. Exports dropped 3.3 per cent in 2015 to about $21.2 billion. This year’s had a bad start too, with year-on-year sales down some 8 per cent to $1.5 billion in January. Unsold stock is piling up, retailers are restive and reasons are being assigned. Since China is such a vast market, its slowdown—coupled with a crackdown on corruption there—could explain some of it. There is also the Swiss franc’s rise last year to work in: its 15 January jump after it quit its euro peg pushed prices (in other currencies) up by about a quarter. Other factors may be at play too. The oil-rich have been tightening their belts. Plus, the global economy has been weak.
But then, it’s also true that fewer people have been buying conventional watches since the turn of the century. Many millennials see them as curios or baubles. The Swiss industry’s boom this past decade-and-a-half was largely based on making fancier and pricier watches that sell as luxury wear. Yet, there is optimism on display, a sign of confidence that so long as sophistication per se is on an uptrend, no threat is too serious to see off. It doesn’t matter if Apple’s watch spans a price range from $349 all the way to $17,000, or if its top-end model made of a gold-ceramic alloy signals direct rivalry. The brands at Basel are a world unto themselves, for they are in the business of wristwear that aspires to art, timeless pieces of beauty that defy the very notion of obsolescence.
I’m not going into the business of ‘smart watches’. Their business is not giving time, their business is giving crazy information
AMONG THE MOST TALKED about watchmakers at Basel this year is Tag Heuer, not only for lowering prices but also for its answer to Apple, a smartwatch that looks like a Tag but uses Google’s Android Wear software (like Samsung’s Gear S2) to cuff your wrist to your phone. If this mid-range brand’s endorsement of such connectivity is seen as a betrayal of classic mechanical watches, nobody is openly saying so. But it has certainly raised an eyebrow or two that Jean-Claude Biver, a Tag honcho who heads watches at LVMH Group and was calling the classic watch a ‘piece of eternity’ last year, has declared himself pleased with the ‘huge’ feedback Tag’s move has garnered.
Arguably, such fusion could prove a big draw in markets that are still in flux, such as India, where only about 24,000 watches— worth some $124 million—priced above $1,000 were sold last year (while China did at least 35 times the figures even under stress). “Luxury begins where rationality ends,” says Ashok Goel of Delhi-based Luxury Time, an LVMH distributor, “and Indians are taught to be rational right from childhood.” Even among the wealthy, he quips, ‘kitnaa deti hai’ remains a consideration.
Function may be an Indian fixation, but form does have a fan base in India, observes Aletta FF Stas-Bax, who co-founded Frederique Constant with her husband Peter Stas in 1988, an ‘affordable’ brand of luxury that claims to offer both. “A lot of watch makers put their head in the sand and said, ‘It won’t affect us’,” she says of Apple, “But it’s not a question of whether it will, but how much.” Of the 145,000 units that Constant sold across the world last year, 16,000 were of a connected model that had turned heads at Baselworld 2015: a watch that hides its chips under a dial so cleverly that its aesthetic appeal endures. “Ten years from now, you’ll still wear it,” she says, implying that this may not be the case with wrist wraps that scream ‘hi-tech’. The trouble with Apple, in her view, is that a blank screen conveys no luxury. “It doesn’t radiate the tradition of watch making, it radiates technology.” Also, if it’s a lot of money being put down, the buyer wants a watch that can last and last. “At the end,” she says, “it’s a piece of art on your wrist.”
A lot of watchmakers put their head in the sand and said, ‘Apple won’t affect us’. It’s not whether it will, but how much
Among the top brands that are valued highly for what they say of the wearer—and not just of his or her financial status, which is a given beyond a price point—it’s only Breitling that has gone digital so far. It offers a ‘connected’ model that looks like any other, real dial et al. With its origin as a watch for aviators, this brand believes a phone link is just another utility, a natural add-on. “Just like in 1952 we added a slide rule—called a ‘flight computer’ back then,” smiles Jean-Paul Girardin, vice-president, Breitling, a pilot himself, “And in 1995, we had an emergency watch to send a distress signal to a satellite. And last year, we understood clearly that a connected watch could fit in well with our products.” But it isn’t a gizmo, he clarifies. While it takes care of flight logs and other data transfers, “The watch remains the master; you don’t need the phone to use your watch.” Also, it doesn’t need a recharge for days on end, unlike digital devices.
Low-end watches have another tack. Victorinox, the Swiss Army Knife maker that turned to sporty watches in 1989, for example, has the idea of putting the new technology in snap-on ‘bumpers’. “Once it’s outdated, you change the bumper,” says Alexander Bennouna, head of watch division/ CEO, Victorinox.
MANY OF THE MOST iconic brands of the luxury market appear amused, if anything, by the advent of connectivity, as if it’s a distraction at worst, maybe even a good thing. The hope is that it’ll adapt younger folk to the idea of having something on one’s wrist in the first place. Once that’s done, they’ll begin to make their ascent to the rarefied club of art appreciation.
For those fascinated by the state-of-finesse achieved by an old tradition of encasing masterly mechanics in hypnotic little discs (olden-day timepieces could actually be swung left and right by a chain), Basel is clearly the place to be. There is a dazzle in the eyes of thousands who swarm past the museum-like displays of new launches. To a novice, almost nothing looks new. But then, each of these brands has crafted itself an identity for the ages.
The novelty has to be subtle.
At Rolex, for example, No 1 of the global luxury market, the aahs and oohs are drawn by such tiny tweaks of design that it seems sacrilegious to even ask if the brand would ever go digital. Of course not. The mesmeric objects on display are argument enough. Ask a Rolex loyalist what it means to own one, and all you get is emo-babble. ‘Haulex’, as it sounds in French, has long been a brand that finds place in wills and asset lists, and no gee-whiz app can be a patch on that.
Its less exorbitant rival Omega, a brand of the Swatch Group, is openly dismissive of Apple. That the latter should see itself in contention with the Swiss elicits a smile from Stephen Urquhart, president, Omega. “Jonathan Ives said that last year,” he says, referring to a boast to that effect of the US firm’s design chief, “I don’t think he’ll say that now.” Apple, oddly, has not put out a figure for its watch sales so far. Whispers at Basel suggest that it may have missed its year’s target of selling 9 million watches, itself just a sliver of its 220-million-plus iPhone user base.
And Omega is no laggard in the ‘smart’ department. This, after all, is a brand that went to the moon, and has been a key mechanical innovator in the years since. Its latest breakthrough fights off the ill effects of magnetic fields on accuracy, a serious problem of the modern age with gadgets loaded with magnets—from phones to iPads—all around us. But again, its allure lies mostly in what you see on your wrist and the passion it evokes. “Last night I had an American retailer here,” says Urquhart, “He had an Omega on his left wrist and an Apple on his right, and he said, ‘It’s not a watch, it’s an iPhone on my wrist’.” The difference, he suggests, is too obvious to explain. “It’s the emotion,” he says, “I don’t take out my iPhone and say, ‘Oh my God, look at this!’”
Most gasps are to be heard in the demo chamber, where new models are passed around a table for scrutiny. One of Omega’s moon models has within it a microscopic footprint on the Sea of Tranquility, to be seen through a window. With the customary gloves on, all I can see at first is a swirl, but then the gentleman on my right helpfully turns my eyepiece around for me, and this novel watermark is magnified into view. I gather the full significance of the lunar sighting a short while later: the brand’s moon adventure is captured in fine detail by the Omega Museum in Bienne, with the story of how NASA picked its Speedmaster for the mission told delightfully by its curator. “A civilised government—and this is a Greek telling you this—cannot just buy stuff,” he begins, “It needs to prepare an RFP, a request for proposal…” before explaining how Omega beat Rolex, Longines and Hamilton to the moon after a series of torture tests. “This watch still flies,” he says, “Russia’s space agency still issues it.”
Wearing an information aid, clearly, is not the same as being on the wavelength of a brand that stirs something within. Walter von Känel, president, Longines, which leads the mid-price bracket and is especially popular with women, is also clear about the brand’s priorities. “I’m not going into this business,” he says of smartwatches, “Their business is not giving time, their business is giving crazy information—and also time.” Tech firms have an advantage of short production cycles, he admits, which gives them “the flexibility to change at short notice”.
Last year, we understood very clearly that a connected watch could fit in well with our products
One would imagine that Longines, which sells half its watches in the $1,500-$3,000 mid bracket, would be more vulnerable than top-end brands. So, is this a bad time for Swiss watches? “It’s always a good time,” replies Von Känel, pushing forth a chart that shows the brand’s steady incline of sales from 380,000 Swiss francs in 2006 to 1.6 billion in 2015. The old fashioned way, he says, works well for it. “If you do revolution, your past product is obsolete. You need evolution.”
Why fix what’s not broke? While the classic look of most watches stays the same, the materials used in them have been changing. For a top-end player like Jaquet Droz, for instance, it’s about fine designs and rare minerals. One of its models has black onyx on a dial of tiffany, a stone found in Utah’s beryllium mines that were reopened after a hundred years. Rado, which has been around for 40 years in India and is a big name back home, is focused on durability assured by new kinds of ceramics. “Luxury is not just style, but substance,” says Andrea Caputo, vice-president, marketing. “If we hadn’t responded to the values Indians care about, we wouldn’t have lasted so long as a top- selling watch in India.”
The two appeal groups that care the least for the vicissitudes of technology, it appears, are heritage and fashion. An ultra luxury brand like Breguet, ‘Napoleon’s watch’, for example, is in the business of selling wearable history. This year, it has a model in memory of Empress Josephine. Marie Antoinette, it turns out, wore a Breguet too. For 18th century chic, there’s also Blancpain, which sells literal works of art on its dials, which are decorated with appliqués that cost a fortune. Not all of it is for everyone to see. One of its artworks, visible only on its underside through a clear caseback, has a gold-and-copper appliqué of a couple entwined in the act of 69.
As for fashion, the best instance of a brand shrugging off technology is Calvin Klein, a low-priced label that sells over a million units a year (beaten in volumes only by Swatch and Tissot among the Swiss made). “That’s not our world,” says Laura Burdese, president, Calvin Klein, “This is about real things, real values and real relationships.”
Exactly what the virtual world lacks.
So, is Basel a party of candlemakers on the eve of a flame-out? “I don’t give a damn,” responds Von Känel of Longines with the vehemence that such a blunt question deserves. Centrally kept time beamed out by a network may have outmoded watches as a way for people to coordinate stuff and order their lives, but that’s not the point.
That India remains overly focused on function—and not enough on form— as a market is an observation widely shared at Basel. The country buys about as many high-priced watches as luxury cars every year, which is no surprise. While Rolex is the market’s top brand by value, Omega sells more watches priced above $1,000 than any other back home. Research findings show that the brands that are well advertised are also well recalled—and aspired to. Swiss watchmakers, however, would be happier if attitudes were to shift and the market emerged faster.
Just how peculiar is India as a market? Is it proving harder to crack than other countries at this stage?
One exasperating oddity, in Von Känel’s view, is that Indian buyers like to bargain. Needless to say, prices in such a business need to hold firm (think jewellery). Value retention, perhaps even escalation (think auctions), is an intrinsic part of the promise. Discounts are bad news. “We’ve cleaned up the grey market in India,” though, he says with some satisfaction. Uruqhart uses the term ‘different’ to describe the country’s consumer behaviour. “The notion of a brand doesn’t have quite the same connotation,” he observes, “People don’t dream from the age of 13 of buying that one watch.”
The reassuring part is that unlike China, India is a democracy, which Urquhart believes is “better in the long run” for the market. In theory, having the power of choice over figures of authority, or over competing claims of any kind, ought to turn people more and more discerning—even if it’s an awfully long wait. Who knows, India may even turn out to be the most rivetting battlefield yet for wrist cuffs of various kinds.
It comes as a mild shock that the best that Omega’s engineers can manage is a watch that resists a magnetic field of 15,000 Gauss, good enough to ensure that it loses no more than three seconds a day. A telecom network, in contrast, loses nothing. And even if it did, it wouldn’t matter so long as everyone else has the same reading on his or her screen. But then, exactitude isn’t everything. Perspectives vary. Why, time itself can be stretched away from its linear path by things relative to each other like gravity and speed, as Einstein figured while working at the Swiss patent office in Bern a short distance away. That’s a fresh way of looking at it. ‘Time and space are modes by which we think,’ goes a quote of his on a poster at an Omega gallery, ‘not conditions in which we live.’
Real life is full of fuzzy things like feelings. And that’s also why a watch one loves can last forever.