Frequent readers of this column may have noted that this correspondent has been cautious in his estimation of the threat to the traditional watch market from wearables technology. As I have written before, this is not because wearables are a bad idea. They are not. I’ve spent quite a lot of time over the last few years testing and wearing smartwatches and have usually found them very useful, if not indispensable. The smartwatch I have perhaps enjoyed wearing most is the TAG Heuer Connected. It is a useful combination of Android Wear software and TAG Heuer hardware. More on that in a future review.
When serious wearables first appeared on the scene, with the Apple Watch, the industry reacted with what can only be called insane panic. Trade fairs in 2015 were all about brands trying to do something “smart”. It smacked a little bit of desperation. You couldn’t walk past a booth at Baselworld or Salon International de la Haute Horlogerie (SIHH) without overhearing a CEO mouthing boilerplate inanity about smartwatches. Oddly enough, the brands that had the credentials to talk about wearables, but maintained almost total silence, were Seiko, Casio and Citizen (the Japanese have been cramming electronics into wrist-sized devices for decades). They seemed unperturbed.
Then, in 2016, traditional watchmakers switched to the other mode they adopt when faced with unsettling innovation—insouciance. Smartwatches? Pfft! This was probably due to three-four reasons. Some brands just didn’t have a plan and feigned disregard. Others had a plan but held their cards close to their chest. Some brands just didn’t seem to care. But most of them, I suspect, had bigger fish to fry. The industry, as a whole, is in free fall. Business is very hard indeed. Earlier this month, the Federation of the Swiss Watch Industry, or FH, announced its 15th straight month of declining exports. The Hong Kong market performed particularly poorly—sales crashed by more than 30% in September compared to the same month last year.
As we have seen in previous columns, this may not be entirely due to the smartwatch boom. In fact, there is now information to suggest that the smartwatch boom itself may be at a major inflection point. Analysts IDC reported earlier this month that the global smartwatch market had contracted by 51.6% in the last quarter compared to the year before. Many brands, including Apple, launched, or will launch, new models subsequently. So many customers will have deferred purchases. But the decline is still substantial. Wearables remain, I suspect, a nascent market. All said and done, it has dipped far more than the traditional watch market has over the last quarter.
In recent months, it has become somewhat fashionable to draw parallels between the emergence of smartwatches and the quartz revolution that nearly wiped out the Swiss brands in the 1970s. The latter was the result of Japanese brands flooding the global market with mass-produced quartz watches that sold for a fraction of the price of mechanical watches, with far greater accuracy, and none of the hassle.
It now appears that this comparison is misplaced. The quartz revolution was not just one of form and function, but, most importantly, one of price. It took watches from the display case in the jewellery store to the aisles of supermarkets. Smartwatches present a very different revolutionary proposition. They essentially replace, or augment, one wrist-based lifestyle object with another (are controlling media playback or receiving notifications lifestyle statements? I think there is an argument that they are). Which means it is erroneous to think that people are buying smartwatches with a view to optimize what they can get done from their wrists. This is a far more subjective than objective transaction. Unlike the quartz revolution. If the smartwatch revolution is like offering a Tesla to someone who owns a Corolla, the quartz revolution was like offering a Maruti 800 to someone who aspired to own a fine horse.
I suspect that many traditional brands have realized that smartwatches don’t currently compete with them. Instead, right now, they may be competing with nothing at all. By which I mean that many smartwatch brands may be trying to convince people to swap the “nothing” on their wrists with a piece of technology.
It is an interesting time, from a broader perspective, in the realm of human-technology interactions. AI assistants, virtual reality, augmented reality and wearables all promise to change the way we live our lives. As phones, earphones and even clothing get ‘smarter’, one wonders how the wrist is going to fit into all this. Do we really need a little touch screen there?