Swatch CEO: ‘We’re going to wait’ on smartwatches

“Swatch Group AG (UHR) Chief Executive Officer Nick Hayek doesn’t mind losing the lead in smartwatches,” Corinne Gretler and Jan Schwalbe report for Bloomberg. “For now, he’s happy to wait and see whether anyone actually wants to buy them.”

“As technophiles speculate about Apple Inc.’s plans to join Samsung Electronics Co., Sony Corp. and LG Electronics Inc. in making electronic gadgets for the wrist, the world’s largest watchmaker is steering clear of a market it unsuccessfully tried to pioneer over the past two decades,” Gretler and Schwalbe report. “‘You won’t see us participating in a race of who’s going to introduce what first,’ Hayek said over coffee in his cluttered office in Biel, Switzerland. ‘There’s still big resistance from the consumer, so we’re going to wait.'”

“‘I believe in the smartwatch, but not as a replacement for watches,’ said Hayek, who wears a timepiece on each arm but uses an older model Nokia mobile phone that does little more than make voice calls. ‘If a market for smart objects on the wrist really develops, then we’ll be there,'” Gretler and Schwalbe report. “Apple could add as much as $11 billion in annual revenue by selling a smartwatch, RBC Capital Markets predicts… UBS analysts say Apple may introduce a smartwatch by year-end. Apple declined to comment on its plans for the devices… Hayek has called his company’s Breguet and Blancpain timepieces — which can cost more than $100,000 — ‘smart watches’ because they make the wearer ‘look like a smart guy.'”

Gretler and Schwalbe report, “‘Many developers in the electronics devices industry only think about technology, not about the beauty and emotions of the product itself,’ Hayek said as he fiddled with an unlit Tudor Macanudo cigar.”

MacDailyNews Take: This poor bastage desperately needs to read up on Jony Ive.

It’s scary how much he reminds us of Ed Colligan:

“We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in.” – Ed Colligan, Palm CEO, November 16, 2006

Full article here.

MacDailyNews Take: Gut reaction: Swatch in 2014 = Research In Motion/Palm/Nokia/Motorola/Etc. in 2006.

Not that he doesn’t have to wait, along with the rest of the lambs, for Apple to reveal what he’ll be trying to copy, but we’d venture to guess that being led to the slaughter by a delusional luddite – with both arms festooned with anachronisms, no less – isn’t going to be a plus.

Deer, meet headlights. Headlights, deer. Enjoy the bloodbath!

To paraphrase George Santayana: Those who do not learn from the past are condemned to repeat it.

The past:

• “Apple is slated to come out with a new phone… And it will largely fail…. Sales for the phone will skyrocket initially. However, things will calm down, and the Apple phone will take its place on the shelves with the random video cameras, cell phones, wireless routers and other would-be hits… When the iPod emerged in late 2001, it solved some major problems with MP3 players. Unfortunately for Apple, problems like that don’t exist in the handset business. Cell phones aren’t clunky, inadequate devices. Instead, they are pretty good. Really good.” – Michael Kanellos, CNET, December 07, 2006

• “The economics of something like [an Apple iPhone] aren’t that compelling.” – Rod Bare, Morningstar analyst, December 08, 2006

• “Apple will launch a mobile phone in January, and it will become available during 2007. It will be a lovely bit of kit, a pleasure to behold, and its limited functionality will be easy to access and use. The Apple phone will be exclusive to one of the major networks in each territory and some customers will switch networks just to get it, but not as many as had been hoped. As customers start to realise that the competition offers better functionality at a lower price, by negotiating a better subsidy, sales will stagnate. After a year a new version will be launched, but it will lack the innovation of the first and quickly vanish. The only question remaining is if, when the iPod phone fails, it will take the iPod with it.” – Bill Ray, The Register, December 26, 2006

• “I am pretty skeptical. I don’t think [iPhone] will meet the fantastic predictions I have been reading. For starters, while Apple basically established the market for portable music players, the phone market is already established, with a number of major brands. Can Apple remake the phone market in its image? Success is far from guaranteed.” – Jack Gold, founder and principal analyst at J. Gold Associates, January 11, 2007

• “iPhone which doesn’t look, I mean to me, I’m looking at this thing and I think it’s kind of trending against, you know, what’s really going, what people are really liking on, in these phones nowadays, which are those little keypads. I mean, the Blackjack from Samsung, the Blackberry, obviously, you know kind of pushes this thing, the Palm, all these… And I guess some of these stocks went down on the Apple announcement, thinking that Apple could do no wrong, but I think Apple can do wrong and I think this is it.” – John C. Dvorak, Bloated Gas Bag, January 13, 2007

• “The iPhone is nothing more than a luxury bauble that will appeal to a few gadget freaks. In terms of its impact on the industry, the iPhone is less relevant… Apple is unlikely to make much of an impact on this market… Apple will sell a few to its fans, but the iPhone won’t make a long-term mark on the industry.” – Matthew Lynn, Bloomberg, January 15, 2007

• “[Apple’s iPhone] is the most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard which makes it not a very good email machine… So, I, I kinda look at that and I say, well, I like our strategy. I like it a lot.” – Steve Ballmer, Microsoft CEO, January 17, 2007

• “The iPhone’s willful disregard of the global handset market will come back to haunt Apple.” – Tero Kuittinen, RealMoney.com, January 18, 2007

• “I can’t believe the hype being given to iPhone… I just have to wonder who will want one of these things (other than the religious faithful)… So please mark this post and come back in two years to see the results of my prediction: I predict they will not sell anywhere near the 10M Jobs predicts for 2008.” – Richard Sprague, Microsoft Senior Marketing Director, January 18, 2007

• “Consumers are not used to paying another couple hundred bucks more just because Apple makes a cool product. Some fans will buy [iPhone], but for the rest of us it’s a hard pill to swallow just to have the coolest thing.” – Neil Strother, NPD Group analyst, January 22, 2007

• “There’s an old saying — stick to your knitting — and Apple is not a mobile phone manufacturer, that’s not their knitting… I think people overreacted to it — there was not a lot of tremendously new stuff if you think about it.” – Greg Winn, Telstra’s operations chief, February 15, 2007

• “I’m more convinced than ever that, after an initial frenzy of publicity and sales to early adopters, iPhone sales will be unspectacular… iPhone may well become Apple’s next Newton.” – David Haskin, Computerworld, February 26, 2007

• “Even if [the iPhone] is opened up to third parties, it is difficult to see how the installed base of iPhones can reach the level where it becomes a truly attractive service platform for operator and developer investment.” – Tony Cripps, Ovum Service Manager for Mobile User Experience, March 14, 2007

• “Apple should pull the plug on the iPhone… What Apple risks here is its reputation as a hot company that can do no wrong. If it’s smart it will call the iPhone a ‘reference design’ and pass it to some suckers to build with someone else’s marketing budget. Then it can wash its hands of any marketplace failures… Otherwise I’d advise people to cover their eyes. You are not going to like what you’ll see.” – John C. Dvorak, Bloated Gas Bag, March 28, 2007

• “The iPhone is going to be nothing more than a temporary novelty that will eventually wear off.” – Gundeep Hora, CoolTechZone Editor-in-Chief, April 02, 2007

• Motorola’s then-Chairman and then-CEO Ed Zander said his company was ready for competition from Apple’s iPhone, due out the following month. “How do you deal with that?” Zander was asked at the Software 2007 conference. Zander quickly retorted, “How do they deal with us?” – Ed Zander, May 10, 2007

• “What does the iPhone offer that other cell phones do not already offer, or will offer soon? The answer is not very much… Apple’s stated goal of selling 10 million iPhones by the end of 2008 seems ambitious.” – Laura Goldman, LSG Capital, May 21, 2007

• “[Apple should sell 7.9 million iPhones in 2008]… Apple’s goal of selling 10 million iPhones this year is optimistic.” – Toni Sacconaghi, Bernstein Research analyst, February 22, 2008

• “Microsoft, with Windows Mobile/ActiveSync, Nokia with Intellisync, and Motorola with Good Technology have all fared poorly in the enterprise. We have no reason to expect otherwise from Apple.” – Peter Misek, Canaccord Adams analyst, March 07, 2008

• “We are not at all worried. We think we’ve got the one mobile platform you’ll use for the rest of your life. [Apple] are not going to catch up.” – Scott Rockfeld, Microsoft Mobile Communications Group Product Manager, April 01, 2008

• “[iPhone] just doesn’t matter anymore. There are now alternatives to the iPhone, which has been introduced everywhere else in the world. It’s no longer a novelty.” – Eamon Hoey, Hoey and Associates, April 30, 2008

25 Comments

    1. Hell, Swatch can’t even tell time. Remember Beil Mean Time from about 15 years ago, where all time keeping would be synchronized to Swatch World Headquarters? ( the sub-measure of the day, instead of 24 hours, was going to be 1000 BEATS). Swatch is well advised to wait for real leaders to show them the way.

  1. I’d give Nick Hayek credit for having the sense not to go to market with what he imagines Apple might release, but instead to take his time and see what actually appears before deciding if he needs to produce a new type of product.

    My hunch is that whatever functions iWatch turns out to have, telling the time will not be a very important consideration. It’s only being referred to as a watch because that’s the name of the thing you wear on your wrist.

    As for the impact on Swatch, it’s hard to say. Watch sales have gone down in recent years and they will probably continue to decline. Swatch almost certainly will not have the expertise to compete with the iWatch, so would most likely do best by sticking to making what they make best – albeit in a shrinking market.

  2. I think he sounds pretty smart. Smarter at least than the other companies currently trying to push out junk because Apple hasn’t shown anyone how it’s really supposed to work yet. Most of the quotes above, MDN, are from AFTER the iPhone came out and people continued to have their heads in the sand. This guy has his head up, ears perked, just waiting for something to happen. Big difference.

  3. “I believe in the smartwatch, but not as a replacement for watches,’ said Hayek…”. Does anyone believe that either?

    Of course it it’s not just a replacement for watches as a timepiece only, just like the iPhone was not just a replacement for phones making phone calls only.

    1. Well, think of it like this: high-end watches are basically jewelry. Family heirlooms you can pass down to your son or your grandson. I highly doubt that smart watches will supplant that segment of the market anytime soon, because a fancy watch has absolutely nothing to do with function.

      I think that anything other than the high-end watch market is going to get slaughtered, though, because anything a watch that is sold based on its functions and features a smart watch will be able to do better.

      So, basically, Swatch is about to sit back and watch itself get murdered. No pun intended.

      1. That’s exactly the market Apple is aiming at, the high market, the “jewelry” market you mention, combining their high tech – high value (fitness/medical) – and Apple’s aesthetics combined in one piece symbolizing highest worth of a “jewelry”, that’s even affordable by most. That’s exactly what Apple does.

        As Hayek says “Many developers in the electronics devices industry only think about technology, not about the beauty and emotions of the product itself,’ Hayek said as he fiddled with an unlit Tudor Macanudo cigar.”

        Hayek is not talking about Apple here. He doesn’t have a clue (as most of us) what Apple is up to with their “iWatch”, if any. But if and when Apple comes with such a piece it surely will combine high tech – highest value – pure beauty – and emotions behind it. When that day comes (autumn?) Hayek will still be fiddling around with his unlit Tudor Macanudo cigars watching future “timepieces” passing him by.

        1. Are you insane? Do you have any idea what an actual luxury watch costs? Sure Apple may be able to replace $1000 or $5000 watches with an iWatch. But the $10,000, or $20,000, or $50,000, or $100,000 watches? No way.

          Apple is not trying to compete with them, because those types of watches are bought for entirely different reasons than an iWatch would be. Someone who’s willing to spend $92,500 on a Patek Philippe Complicated isn’t going to replace it with an iWatch.

          The iWatch is going to be a functional watch that replaces sports watches, fitness devices, and eats up the entire low end of the market. But there is absolutely no point in competing in the luxury watch department because Apple is not going to find a large enough market willing to purchase a $15,000 smart watch that they’ll replace in three years.

          That doesn’t mean Apple is going to be in a race to the bottom with Samsung and Microsoft. It just means that Apple literally cannot compete with Rolex or Breguet or Jaeger LeCoultre in the luxury watch market because it’s a completely different type of market than the one Apple is in. It’s like building a high-quality smart car and saying they’re going to take on Bugatti and Lamborghini.

          1. Dear docwallaby, you obviously didn’t read my lines well enough, or at least not between them :-). Or, should I say that I am sorry that I wasn’t clearer in my wording/expression earlier. My key words in the first sentence were: “high market” – symbolizing… worth of “jewelry” – affordable.

            That surely doesn’t mean competition in the higher price range. Don’t mix high value and high price because it does not always go together, and sometimes those of highest value can be affordable.

            That’s how business goes, and what I was referring to in my earlier post talking about the high marked, high price vs highly valued/lower price market: Many of those who are now buying in the higher price watch range are gladly going to switch (not Swatch) over to Apple’s new “iWatch”. That does not mean it will be of a lesser value than the pricier ones, on the contrary, it will be of a much higher value than our previous watches, though lesser priced. That’s a competition in the higher market/luxury market, and it’s really not about the price, it’s about the place on your arm, cost irrespective.

            You asked if I had any idea of what actual luxury watches costs. Yes I do, or at least I did. I have a few years old Rolex, a few years younger Longines and a few other little less costly “Swiss Made” watches and even a cheap crap Armani (like the design though). Only Swiss Made watches and that are valued in the so-called high market/luxury range (except for the Armani). And I can tell you that I would gladly put my watches in my drawer when Apple’s “iWatch” arrives. I was in fact going for a new Patek Philippe when the iWatch rumor got me – and I am on hold now.

    2. Totally with you, the days of wearing a time piece is gone. I value functionality and value add. Something that will help me do things that I know I should do but I cannot be bothered or do not have the necessary time.

      A device that easily tracks biological variables would be just great. I own so many little devices that I like to get rid off such as pulse monitor (many), blood oxygen, and few others. Any device that allows me to reduce the unconnected mess of functions into a cohesive device in a single database is worth a lot to me.

      Most people are confused about the value and price people are willing to pay. My pulse monitor for my running cost me close to $500, and my 2nd model stopped working recently. A device that would replace my running pulse watch and pedometer, sleep monitor is worth at least $499 every 2-3 years to me.

      Even if Apple does not bring an iWatch then the healthBook has already forced many companies to get out of their own data island and I will only be buying monitoring products that are HealthBook Compatible. Thank you Apple.

      PS. Making the imaginary iWatch stylish will just be a bonus for many who consider Fashion first and we all know Apple DNA cares about the look as well as form and function.

  4. There were 2 big losers when the iPhone was released. First, Blackberry whose business has virtually been destroyed by a better designed device. Second, Nokia whose market share collapsed because it clung onto Symbian for too long and failed to follow the market into the smartphone era. When it finally did it chose M$’s platform which is a virtual non-starter. Nokia may has eschewed Android due to the belief that they would have been sued by Apple for IP theft.
    Swatch make mid to low-range watches and do not make many digital watches. They have their niche and probably think that a next-gen watch will not hurt their business. As we have seen with the iPhone, both high end and low-end markets can be decimated by a device that changes people’s expectations.

    1. Fund managers are not there to make money for the investors. They are there to move the market so that the real players can cash in.
      For example, my 401K at Fidelity has grown ~30% over 10 years based on price alone. Luckily the dividend reinvestment has contributed about the same amount. My Apple holdings have grown 870% in less time.

  5. Smart Watch = A scaled down version of a smart phone with a fraction of the functionality, a tiny screen and with some medical functionality such as heart rate and even blood pressure with 10% accuracy.

    Why reach into you pocket to see the time or see who’s calling on your $600 smart phone when you can look at your $350 smart watch and tap the screen to leave a message.

    Smart watches, the new mood rings.

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