NATIONAL POST | CLAIRE BROWNELL With a minimalist design inspired by the classic font, Mondaine’s Helvetica line of watches is marketed toward people who geek out on design and typography, not the latest gadgets.
The line of watches, launched in November and priced starting at about $380, is analog and free of frills – no diamonds or platinum, no dials tracking different time zones or phases of the moon. That’s consistent with Mondaine’s overall brand, offering mid range-priced watches retailing for a few hundred dollars that appeal to photographers, artists and graphic designers with their clean aesthetic.
That brand makes Mondaine an unlikely candidate for the first smartwatch from a traditional, family-run Swiss manufacturer. But when MMT – a joint venture between Silicon Valley wearable tech firm Fullpower Technologies and Swiss watch company Union Horlogere Holdings – pitched chief executive Andre Bernheim on their technology, he said he didn’t hesitate.
“It took my brother and myself about 10 seconds to look at each other and say ‘OK, that’s something we really want,’” Mr. Bernheim said. “We are able to stick to our watch design, to our stories, to a classical, very purely designed watch – and add a special feature.”
On Feb. 27, Mondaine unveiled the Helvetica No. 1 Smart, which adds a secondary dial – still analogue – at the six o’clock position that communicates information harvested from a sleep- and activity-tracking sensor. A week and a half later, Apple Inc. unveiled its own smartwatch, which does all that plus deliver email and social media notifications, make payments with the wave of a wrist and allow the user to draw and send sketches.
Mondaine may be the first well-known Swiss watchmaker to unveil a smartwatch, but it won’t be the last. Tag Heuer, Swatch and Frederique Constant are developing them as well and Montblanc announced plans to release a strap with smart capabilities in January.
None of the Swiss smartwatches come anywhere close to competing with the Apple Watch on technology, however. Frederique Constant’s smart watch is based on the same technology as Mondaine’s, with a secondary analogue activity-tracking dial; Montblanc’s e-strap has a pixelated display that’s not nearly as slick as Apple’s; and Tag Heuer’s model is still in development.
At a news conference announcing Swatch Group’s annual results Thursday, chief executive Nick Hayek said the company is working on adding technology to its watches that would allow wearers to make payments and unlock doors. However, he said Swatch wasn’t interested in making a “mini mobile phone on your wrist.”
As Apple prepares to launch the Apple Watch, the major Swiss watchmakers are remembering the ‘70s. That period of time is now known in the industry as the “Quartz crisis,” when Swiss watchmakers were slow to adapt to new technology that flooded the market with cheap, accurate watches. As a result, their global market share shrank from 50% to 15%, their workforce was slashed to less than a third of its peak of 90,000 and 1,000 of the country’s 1,600 manufacturers went out of business.
New York City-based luxury consultant Robert Burke said watchmakers should think carefully before pouring resources into smart capabilities. So far, traditional watches with extra smarts haven’t impressed him.
“In most cases either fashion or function is compromised,” Mr. Burke said in an email. “The most successful luxury brands have been the ones that have concentrated on their heritage and what they do best.”
So far, the truly high-end brands with watches retailing for tens of thousands of dollars have been doing just that. The only sign of interest the likes of Rolex, Patek Philippe or Omega have shown in smartwatches is the cease-and-desist orders they’ve been sending to sites offering pirated watch faces, which can make your $280 Moto360 smartwatch look like a $37,000 Rolex Daytona.
Jon Cox, head of Swiss equities and European consumer equities at Kepler Cheuvreux, said two-thirds of the Swiss watch industry’s US$50 billion in annual sales comes from luxury watches with an average price of US$17,000. The rising Swiss franc and a crackdown on corruption in China are much bigger threats to those sales than the Apple Watch, he said
“It’s difficult to believe the smartwatch poses a threat to this overall industry, because we’re talking about seriously wealthy individuals,” Mr. Cox said. “If they can afford a US$17,000 watch, they can also afford a smartwatch for jogging around the block.”
Mr. Cox said manufacturers of watches that retail for less than US$1,000 have more reason to worry. Mr. Cox said Swatch, the world’s largest watchmaker whose sales are responsible for about one-fifth of the Swiss watch industry, has been facing pressure on its stock for the last 18 months because of speculation about how the Apple Watch might affect it.
Apple, however, is betting that Mr. Cox is wrong, aggressively courting the luxury consumer with a 12-page advertising spread in Vogue magazine and releasing models made of gold and other precious metals that cost up to US$17,000. An Apple Watch is unlikely to become a collector’s item or a family heirloom since the company’s business model relies on convincing customers to replace them regularly with more up-to-date versions, but if the gadget becomes as ubiquitous as the iPhone has, it’s easy to imagine executives trading in Omegas for Apple Watches when it comes to everyday wear.
Angela McIntyre, research director at the technology research firm Gartner Inc. who covers smartwatches and other wearable tech, said smartwatches are already eating into the market share of smart fitness wristbands. She said she expects the Apple Watch to take the sector mainstream this year, with units sold projected to quadruple from less than 10 million units in 2014 to about 40 million in 2015.
For now, smartwatches and traditional watches are very different products that cater to different kinds of customers, Ms. McIntyre said. The smartwatches that are already on the market are typically sold in electronics stores – not places people normally think to shop for a watch.
“Where they will have difficulty penetrating are in the types of stores where people go to buy high-end or even mid-range watches – for example, the department stores, the jewelry stores, the boutique watch stores,” Ms. McIntyre said. “The traditional watch manufacturers have a definite advantage.”
To address that problem, Apple is redesigning its stores and previewing the Apple watch at pop-up locations at select high-end shopping destinations around the world, such as the Galeries Lafayette in Paris. Apple’s head of design Jonathan Ive has been quoted recalling a conversation with a customer who said, “I’m not going to buy a watch if I can’t stand on carpet.”
Mr. Bernheim, the CEO of Mondaine, said he’s not afraid of the Apple Watch. In fact, he said it might even help his company by getting young people used to wearing something on their wrists again after years of using their smartphones to check the time.
“Once they get used to wearing a watch, one day they will change to use a more traditional, classical-looking watch with actual hands, analogue watches,” Mr. Bernheim said. “And hopefully they will buy one of our watches, whether smart or not smart.”