Swiss watch industry denies 'Nokia moment' from new Apple Watch
10/09/2014 19:24
By Silke Koltrowitz and Eric Auchard
ZURICH/FRANKFURT, Sept 10 (Reuters) - Apple Inc's AAPL.O
iPod upended the music industry, and its iPhone knocked Nokia
off its smartphone perch, but Swiss watch makers breezily
dismissed warnings that the technology giant's new wristwatch
gadget could do something similar to them.
"They are essentially transient products rather than items
of enduring value," one Swiss watch industry expert sniffed.
Franz Tuerler, owner of a luxury watch store on Zurich's
main shopping boulevard, Bahnhofstrasse, said the appeal of
Apple watches would be to a different class of customer who
prizes technology over prestige and emotional attachment.
"I think the Apple Watch will be successful. But it's not
competition for the classic Swiss watch industry," Tuerler said.
While the luxury end of the market might feel itself well
insulated from the blast of competition from Apple, analysts are
far from convinced that the industry can be complacent,
especially at the more affordable end.
Vontobel watch industry analyst Rene Weber told Reuters:
"(Apple Watch) is the first convincing smartwatch, and we
believe it will impact the entire watch industry, but mainly at
the low-/mid-end price level."
An industry source acknowledged that watches priced between
500 euros and 1,500 euros ($646-1,940) could feel the pinch.
Investors have singled out diversified industry heavyweight
Swatch Group UHR.VX , which makes 20 percent of its sales in
the low- and mid-priced ranges, as most at risk.
Swatch shares traded 2.5 percent lower on the Zurich
exchange after Apple spelled out its plans to offer three lines
of watches -- sport, standard and luxury versions -- with prices
starting at $349 (270 euros) and set to ship in early 2015.
Its shares have lost nearly 18 percent of their value so far
this year, lagging an 8 percent rise in the Swiss market index,
and analysts cite Apple's market entry as the main reason.
The Swiss industry has so far taken a decision not to join
but to try and beat the smartwatch phenomenon. Not a single
watchmaker has announced a deal with a technology company to
work together on a smartwatch project. Swatch has said several
times it has all the knowhow to make "smart" watches and does
not want to be dependent on a partner. ID:nL6N0PZ4E6
Swatch Chief Executive Nick Hayek told Reuters in a recent
interview that the company prefers to go it alone with a launch
next year of watches with smart fitness functions.
Apple Watch, however, will be sending messages, playing
music, and acting as a payment medium on top of health
monitoring functions. The danger for the watchmakers is if Apple
succeeds in redefining what people expect from a wristwatch.
Jean-Marc Jacot, chief executive of privately owned
Parmigiani, whose watches sell for an average 30,000 euros, does
not see that as a threat.
"High-end consumers will buy Apple Watch, because it is
Apple, but they should not stop buying classical watches. They
will have both," he said.
(Additional reporting by Oliver Hirt and Katharina Bart in
Zurich; Pascale Denis in Paris; Valentina Za in Milan and
Christina Farr in San Francisco; Editing by Will Waterman)
((eric.auchard@thomsonreuters.com; +49 69 7565 1235; Reuters
Messaging: eric.auchard.thomsonreuters.com@reuters.net))
Keywords: APPLE LAUNCH/WATCH SWITZERLAND