1969 marked the beginning of a revolution in the watch industry.
That was the year the Japanese watchmaker Seiko introduced the Seiko Quartz-Astron 35Q, the first watch to be powered by an electrical oscillator regulated by a quartz crystal.
It took nearly 10 years and teams of engineers to develop. But upon its release it immediately ushered in what is referred to by people in the watch industry as “the quartz crisis.”
Until Seiko’s Astron, Swiss watchmakers were king. In 1970 there were more than 1,500 Swiss watchmakers. But by the height of the “crisis” in 1983, their numbers stood at a mere 600.
The rise of the Quartz watch ultimately pushed Swiss watch companies into the luxury market.
According to Andrea Squatrito, the founder of RE Analytics, a big-data intelligence boutique based in Milan, new technology is once again drawing a battlefield for Swiss watchmakers. Squatrito’s report called “Rolex: An industry under threat” outlines how the rise of smartwatches may pose a new threat for Swiss watch brands.
Squatrito’s report identifies two main business segments for Rolex in particular: “people who are buying watches in the €2,500 to €11,000 range and people buying watches in the €23,000 to €33,000 range” (one euro is worth $1.06). Together these two segments account for 83% of the company’s business.
Squatrito believes that Rolex’s lower-end watches, which make up 45% of the company’s customer base, are at risk of being challenged by high-end wearables like the Apple Watch Hermès.
“There are touch points in the lower end of luxury watches and the higher end of wearables,” Squatrito said.
“The Apple Watch hasn’t reached its full potential in terms of sales – yet – but there are signals that Swiss watch makers may soon see a large portion of their business threatened,” Squatrito added.
Squatrito does not think the end is nigh for Rolex and other Swiss watchmakers. But he does think that increased competition from premium smartwatches will force them to make big changes.
“For instance,” he concluded, “Rolex may follow the lead of fashion companies like Chanel and expand into non-core products to make up for the losses brought on by wearables.”