This Swiss CEO Is Sounding The Alarm On Apple

On March 11, Peter Stash, co-founder and CEO of Frederique regular, sounded the alarm about what he sees as the increasing danger of the Apple Watch to the Swiss watch industry.

Writing on his non-public blog on the Frederique regular internet site, Stash referred to a study via the Washington, DC-based totally Juniper studies institution, estimating that sales of hybrid connected watches (i.e. With analog dials) will bounce to eighty million units in 2022 from 14 million final year. Then he wrote this:

"I sense that the Swiss watch enterprise still doesn't recognize how an awful lot the Apple watch and different smart watches have eaten into the figures for quartz watch actions ... The Apple Watch is now in its 0.33 era and who is aware of what they will bring with the fourth technology.

In the event that they start to adapt the case and have something other than just a black display, then the Swiss watch industry might be heading for trouble. I nevertheless say quite frankly that lots of my colleagues within the enterprise don't know what is occurring."

IT'S NO SECRET THAT THE APPLE WATCH IS HAVING A LARGE IMPACT ON QUARTZ WATCH SALES

Supply: Hoodwinked weeks later, I met with Stash on the Basel world watch show to find out why he is so worried about Apple when so a lot of his colleagues aren't.

With regards to smart watches, the fifty four-yr-vintage, Dutch-born Stash has cred. He has turned Frederique consistent, the firm he and his wife, Valetta Stas-Bax, founded in Geneva 30 years in the past, into considered one of Switzerland's few smart watch gamers.

In 2015, Frederique steady added its Homological Smart watch, a connected watch with an analog dial and fingers in preference to the greater common touch screen dial. It used motion era and become advanced by means of the Swiss organization Manufacture Modules technologies (MMT).

“LOTS OF MY COLLEAGUES INSIDE THE INDUSTRY DO NOT KNOW WHAT'S HAPPENING.”

Stash says the Frederique steady institution has sold 150,000 Homological Smart watches underneath the FC and Alpine labels. (Alpine is a sports-watch brand the couple obtained in 2002 to complement Frederique regular's classic-watch positioning.)

 Certainly, the FC group holds an outstanding 28.five% marketplace share in value inside the $600+ linked watch section, according to exclusive information that Stash showed Hoodwinked from a top research company. (The FC logo holds the lion's proportion at 25.3%.)

This yr, Stash has upped the ante with two new smart watches. The Frederique regular Hybrid Manufacture watch, priced from $3,495 to $3,795, is the sector's first smart watch with an in-residence mechanical motion. The new Alpine alpine outside Smart watch, which Stash has released on Kick starter, contains 5 sensors and extra than a dozen features. The fee is not set but, but it's miles expected to be around $900 to $1,000.

IT’S NO LONGER SIMPLY 30-SOMETHINGS

Clients are responding to the new health functions in smart watches, Stash says. "We see this in the research statistics. We idea that smart watches had been being sold through 30-somethings, but they may be no longer. They may be more often than not bought by using 50-to-60-somethings, at the least in our phase [which is] the extra high priced watch. And this is logical, because older humans are extra interested by their fitness.

"So, once Apple or others start to offer these records, then people are going to continue to wear the ones watches. The health component is best starting now.

We [Swiss] higher be very, very cautious. Apple knows lots extra than we do, and that i see surely what they're doing. They'll move increasingly into this vicinity, finding methods to inform humans about medical conditions. And they may simplest get better."

Apple is the large threat. It bought simply underneath 18 million Apple Watches in 2017, in keeping with industry estimates. (Market facts company’s global data Corp. And Asimov positioned the parent at 17.7 million; innovative techniques estimates 17.four million. Apple itself does not expose watch income records.)

“Extra pricey smart watches are offered through 50-to-60-yr-antique something’s, not 30-somethings.”

"but it's not only Apple," Stash says. IDC estimates that each one different manufacturer sold 15.6 million. "The IDC data means there is forty seven% that isn't Apple."

Certainly, remaining yr's general sales of 33.three million smart watches a long way passed the entire Swiss watch enterprise's output of around 25.five million devices. (Switzerland exported 24.3 million watches in 2017, in step with the Federation of the Swiss Watch industry; every other 5% were bought in the United States itself.)

It is this growing tide of smart watches that Stash is worried approximately. "This is what is going to beat out the regular watch industry," he says. "it is already occurring at the quartz side."

Stash cites figures that we referred to as interest to in a February 7 article, displaying that Swiss exports of quartz watches had fallen via three.25 million gadgets in just two years to 17.1 million pieces, a drop of 16%. "that is because of the smart watches," Stash says. The scenario will worsen as smart watch manufacturers upload health applications to the watches, he predicts.

PROTECTIVE THE QUARTZ FLANK

The Hybrid Manufacture launched in advance this year and brings smart watch capabilities to an otherwise mechanical watch.

Problem about the effect of smart watches at the Swiss quartz-watch marketplace was a aspect in Stash’s decision to compete within the smart watch category. Frederique steady is a leader in Switzerland's "accessible luxury" category of watches (priced roughly from $1,000 to $4,000). It produces quartz men's and girls' watches for the lower give up of the product line.

But that wasn't the principle purpose, Stash says. "To begin with, we commenced this in 2015 because i like it. I like the product. I just like the innovation element. It really is the motive force. I really like it because you're including features to a satisfactory quartz watch, that's inherently a touch bit boring, a touch bit standing nonetheless for at the least 25 years already.

So now we can add simply meaningful features, things we will test with, things we can use. I just like the apps. And i am an increasing number of intrigued by what type of insights we will deliver to humans.

"but at the equal time, it's far a defensive move. I additionally see surely that the smart category goes to consume into the quartz category. So, it's also partially a defensive pass. I am very open approximately that."

Stash sees the actual fee of the Homological Smart watch being its ability to respire new existence into the quartz watch class.

Stash could be very satisfied he took the soar into smart watch era. Smart watches have end up an essential area of interest for the group. In less than three years, they account for 14% of FC institution's total annual sales. For Frederique steady, the leader emblem, they constitute 12% of total sales; for Alana, 20%.

“We’re going now into more fitness-related [apps]. It turns into very exciting and very dangerous. You are going to get an eye fixed that is necessary.”

"it really is crucial," Stash says. Smart watches enabled the company to develop thru the Swiss enterprise's downturn of 2015-sixteen. "[The industry] had a tough period," Stash says. "If we did not have this class, we would have neglected between 10% and 15% of turnover. And we would now not have grown, I tell you." FC would were a number of the horde of Swiss watch firms whose income slumped for the duration of that extend, he says.

QUARTZ WATCHES ARE ALREADY ELECTRONIC, SO SMART WATCH FEATURES ARE A NATURAL ADDITION

All of that makes Stash constructive approximately the marketplace for steeply-priced smart watches. "Now we're adding the Hybrid Manufacture, which, value wise, is high. Additionally, the alpine, that's tons greater a mass product. So we're going to see in which it goes. I assume it's a class that possibly will constitute about 20% of turnover in the medium to long term. And it could properly constitute 30%."

(Real sales figures for the group are not to be had. Thru 2015, the organization become privately held, and did now not divulge income records. In 2016, Japan's Citizen Watch Co. Acquired Frederique steady protecting SA for $119.2 million. Citizen is a public employer; however it does now not get away income by way of brands. The FC institution includes a 3rd brand, Ateliers demonic, a small producer of haute horlogèrie watches, co-founded through Stash in Monaco in 2008 and now established in Geneva.)

Stash is convinced that Swiss brands can, and certainly have to, compete within the smart watch market, in particular in the hybrid category, which a few analysts are expecting is about to explode.

He says studies display that price isn't the number one element in the purchase of a smart watch. With smart watches, he says, "the number one cause people buy is the design. It starts with that."

Frederique steady's satisfactory-selling smart watch is its most highly-priced version, a rose-gold-plated watch priced at $1,290. It accounts for between 30% and forty% of the brand's smart watch sales.

Ultimately, Stash expects smart watches to account for 20 percent to 30 percent of Frederique constant group income

THE SECOND MAXIMUM CRUCIAL REASON IS IMMEDIATELY GET ADMISSION TO FACTS

On the new Hybrid Manufacture watch, the proprietor sees instantly his step goal totals. "That is what the patron needs," Stash says. "We’ve got different watches in which you need to press the crown and the arms will point to the percentage. Even when the ones [models] are less high priced, they're less desirable. Humans need to peer the records right away.

STATISTICS IS GOING TO BE SECRET TO MAKING THIS WORK

"The range three reasons is price. Charge is essential however it is now not the figuring out component. It's adequate that it's a touch bit greater costly when the watch seems accurate."

A handful of Swiss firms have added smart watch fashions. In addition to FC and Alpine, they encompass TAG Hewer, Montblanc, Movado, Mundane, and the General web design logo Mykonos. Beetling and Louis Vinton have put a toe in the water. Most different manufacturers, although, are taking a pass. And taking a danger, Stash says.

"That 3 million drop [in quartz watches]: a part of this is due to the smart watch wave. And that's now not going away. I nonetheless pay attention human beings saying, 'it's just something brief.' I do not think so. I assume when you're giving more fitness insights, while the packages have become higher and better, it's going to most effective accelerate the hassle."

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