Swatch Strategy Winding the i-Watch

The CEO of Swiss watchmaker Swatch said Apple's new smart watch will be so complicated, users will have to recharge it every 18 hours. That's a step backwards in time-keeping technology, the Apple rival says.
Nick Hayek thinks he has Apple's number.

Nick Hayek, the chief executive of Swiss watchmaker Swatch, doesn't beat around the bush. He claims computer watches such those by Apple have limited chances of success. At a news conference, he did a spontaneous spot check:

“Hands up, who of you in this hall is wearing a Smart watch or a fitness band?” Not a single hand was raised. “So you see,” said a visibly pleased Mr. Hayek, “there is much talk about them, but they are never to be seen.”

Last week, Apple presented details concerning its long-awaited smart watch, which is named the Apple Watch. Days later, Mr. Hayek was explaining how the world’s largest watch company intends to respond.

“The Apple Watch is nothing more than the miniaturization of a smart phone for the wrist,” he said. “That's not what we're going to do. Instead we will provide our watches with useful additional functions, without overly reducing the lifetime of their batteries.”

Swatch is introducing a new series of touch-screen watches. The Swatch Touch Zero One, which is slated to arrive this summer, has 18 functions. For example, it measures calories burned and steps taken.

The Apple Watch is nothing more than the miniaturization of a smart phone for the wrist. That's not what we're going to do. Nick Hayek, Chief executive, Swatch

“With normal use, the battery lasts up to one year and can be replaced by the wearer himself,” Mr. Hayek said. The watch will cost 135 Swiss francs ($134). It is marketed to fans of beach volleyball. The device can measure the speed of a hard-hit ball, for example.

The touchscreen watch series is scheduled to release new variations every three months. One watch will have extra functions directed at people who cook for a hobby.

“I can imagine that altogether four to five million pieces from the series will be sold,” he said. Analysts at Credit Suisse, on the other hand, predict Apple will sell 10 million smart watches ― per quarter.

Apple is equipping its watch with a high-definition but electricity-sapping display. With apps, the watch will have access to a wide spectrum of functions such as accepting telephone calls or navigating ― many of which, however, only work in connection with a smart phone.

The downside is the watch has to be recharged after 18 hours. Mr. Hayek hopes people wearing the watches will tire of searching constantly for an electrical outlet.

Computer watches are a threat to the Swiss watch industry just as Japanese quartz models were in the 1970s, according to Elmar Mock, who co-invented the Swatch plastic watch and now works as a consultant. He believes the industry is underestimating the threat. “All good watches that cost between 500 and 1,000 francs are in real danger,” he told the Bloomberg news service.

Mr. Hayek sees things differently: “Smart watches are an opportunity for us, because then, especially in the United States, people who never wore watches will become interested in them.”

Mr. Hayek is putting great hope in “near field communication” (NFC). The technology enables actions such as opening a door or paying a bill, without the need for physical contact.

“We can insert this technology into almost any watch and thereby provide it with additional functions,” he said. Thus he plans to provide even the Seamaster ― best known as the watch worn by James Bond ― with the NFC technology. Seamaster is made by Swatch's luxury-watch subsidiary Omega.

Plans for China center on a new Swatch model that customers can use to make payments. Swatch is partnering with China Union Pay, the only credit-card organization authorized in China, in the deal. Another new Swatch with payment function is planned for Switzerland, too. Mr. Hayek declined to reveal the name of the partner bank.

 

Holger Alich is Handelsblatt's Switzerland correspondent. To contact the author: [email protected]