Swatch reveals plan to compete with smartwatch rivals

13 Mar 2015 | Author: | No comments yet »

In smartwatch war, Swatch goes for cheap, quick and China.

To observers of the secretive Swiss watch industry, its quiet, seemingly passive response to Apple Inc.’s plan to attack their centuries-old business could be mistaken for submission before an overwhelming adversary.CORGEMONT, Switzerland (Reuters) – The world’s largest watchmaker unveiled its riposte to Apple Inc’s smartwatch on Thursday, announcing a plan to put cheap programmable chips in watches that will let wearers from China to Chicago make payments with a swipe of the wrist.Nick Hayek, chief executive of Swatch Group, says near-field communications technology removes some of the perceived limitations of smartwatches, enabling some smart functions to be integrated into its existing lineup of timepieces.

But luxury and fashion groups Richemont, LVMH, Swatch Group and Guess Inc. have been busy in the past year tinkering with smartwatches of their own, while aiming to preserve their products’ more timeless appeal. Swatch Group will start offering watches with near field communication (NFC) chips within two months, chief executive Nick Hayek said at a news conference on the company’s annual results which were released last month.

When Apple Watch was first announced last September, some experts dismissed such devices as appealing to a different class of customer – those who prize technology over prestige. The Swiss company’s strategy appears to revolve around including individual tech features in different models rather than going head to head with Apple, the world’s most valuable firm, to create all-in-one smartwatches combining many functions. “We are the world champions of integrating smart functions into a watch,” Hayek said. “We don’t want to produce a mini mobile phone on your wrist. Hayek dismissed smartwatches; the son of Swatch’s founder grumbled the screens were too small, batteries too weak and designs inelegant, particularly for customers of conventional brands like Swatch’s Breguet.

Others can do that.” Apple’s watch will go on sale in nine countries starting in April, priced from $349 for the smaller model and $549 for the standard version, although a high-end “Edition” watch will sell for at least $10,000. “It’s a fantastic opportunity for us. That technology will allow the watches, which will range from the company’s eponymous plastic brand to its high-range Omega line, to be used for tasks like cashless payments and hotel-room access. While the Apple Watch has drawn rave reviews for many of its features, its limited battery life of no more than 18 hours before re-charging is considered a big drawback. The technology consists of a tiny chip and an antenna, so the watches won’t require daily recharging. “We are not a consumer technology company,” Mr. An iPhone tends to lose half its value within the first year after it is introduced, while Rolex’s flagship Submariner model has risen in value, analysts at Berenberg Bank noted in a recent report.

Montblanc, owned by Richemont, announced in January the launch of the TimeWalker Urban Speed e-strap watch, which combines a traditional mechanical watch with an interchangeable strap containing a Bluetooth connected device. On Monday, Apple hosted a 90 minute event in San Francisco at which it boasted about Apple Watch’s features and introduced models that blur the line between technology and fashion. I congratulate them.” Both firms’ strategies could co-exist and succeed, Hayek said, before adding a dig at the bigger rival: “Upgrading software every year, that’s not our business.” For its near-field chips, which will cost around 2 francs ($2) per watch, Swatch has teamed up with China UnionPay, the Chinese credit card association, as well as a Swiss bank and a major credit card company.

Meanwhile, Apple’s high-end models, which sport price tags of more than $10,000, will likely hit midlevel Swiss watches, the core segment of the market. Swatch is also launching a range of sports-themed “Swatch Touch” smartwatches which will be able to “buddy up” with a smartphone via a Bluetooth connection. Already, Frederique Constant SA and Mondaine Watch Ltd. have unveiled smartwatches to blunt Apple’s advance into fashion, which it has announced with an advertising insert in Vogue. Smartwatches could eat as much as 10% of sales of Swatch’s entry-level plastic brand and 5% of its midmarket brands, which include Tissot and Mido, in 2015, according to estimates by Luca Solca, an analyst at Exane BNP Paribas.

A year ago, it said it would produce a smartwatch based on Google’s Android Wear software, and in September it said it had partnered with chipmaker Intel Corp. The threat that Apple will cannibalize existing watch demand is most acute for Swatch, analysts say, because it has the highest proportion of products selling for a few hundred dollars, instead of several thousands as high-end names do. Baktidy, owner of two auto body repair shops in New York and two dozen watches by luxury brands including Patek Philippe, Audemars Piguet, Breitling and Omega.

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