Frederique Constant CEO: Apple is now a threat to the Swiss watch industry

Hybrid smartwatches currently make up 12% of the company's revenue

In 2014, just a week before Tim Cook revealed the Apple Watch, a New York Times article divulged a small but colorful anecdote about Apple's design czar, Jony Ive, who was convinced the company was about to reign down hellfire on the Swiss watch market. "In bragging about how cool he thought the iWatch was shaping up to be, gleefully said Switzerland is in trouble — though he chose a much bolder term for 'trouble'".

That was four years ago. So is Switzerland f**ked?

Frederique Constant's CEO Peter Stas is certainly starting to worry: he says it's time for the Swiss watch industry to adapt or die. The relatively young watchmaker's newest contribution, the Hybrid Manufacture, is the first timepiece to market to combine a mechanical movement with smartwatch functions. It's a brand new idea - Frederique Constant's Horological smartwatches have so far used quartz movements with batteries - and one that will most appeal to the classic watch enthusiasts.

Hands on: Frederique Constant Hybrid Manufacture review

But this alone won't be enough, and Stas knows it. Swiss watch exports may have seen a 2.7% rise in 2017 according to figures from the Federation of the Swiss Watch Industry, but it comes after two tough years. And while it might sound encouraging, quartz watch exports still declined to a 33-year slump as smartwatches continued to eat hungrily into the middle market. "This is a fact," says Stas. "Some people are still in denial and think it will come back miraculously. I don't think so - unless we start to act."

Frederique Constant CEO: What Apple's doing right now is a threat to the Swiss watch industry

Indeed, for the first time in Q4 2017 Apple was estimated to have shipped more watches than the entire Swiss watch industry did, but before we sound the death knell, the Swiss watch industry still makes up 55% of global watch sales, and Stas believes that there will always be a demand for classic timepieces, even if those classic pieces become smart. "If you look at a watch in general, the biggest surface is the dial. We always pay much more attention and time on the dial. That's what people will see every day and gives the watch this appealing character."

Some people are still in denial and think the industry will come back miraculously. I don't think so

For that reason, Stas tells us the company has no interest in pairing with Google for an Android Wear Frederique Constant. "We could have jumped in, but then you have the black screen," he says. "But having said that, what Apple's doing right now is a threat to the industry."

Frederique Constant's decision to keep creating watches with some smart abilities is itself an admission that it needs to keep apace. According to Stats, smartwatches make up 12% of the company's overall revenue right now. "This is significant for a new category, which has only proven to us that this is the right way to go. And we will continue to go, with more to come later this year."

12% is by no means a measly share of the revenue, and Stas says he expects this number to rise over time, but he's also more cautious after seeing Fossil's performance in the market since doubling (and tripling) down on wearables. However Fossil's woes are multifaceted and can be largely blamed on the state of the retail industry, while its smartwatches seem to be starting to gain traction.

Next on the agenda: Heart and health

Frederique Constant CEO: What Apple's doing right now is a threat to the Swiss watch industry

We asked if Frederique Constant could end up making a bigger plunge itself, like how Michael Kors announced last year that it would make all future men's watches "smart" (but told Wareable at CES this year that this will no longer be so). Stas says it will be more gradual. More immediately however the company plans to evolve its health features as this, says Stas, is the big threat: Apple's Series 3 was the moment he really started to see why the industry can no longer dismiss the power of the smartwatch. "When they get better at that, these watches become indispensable to people; they create a certain stickiness that was not there before."

Stas says Frederique Constant is currently looking seriously into heart rate technology for future watches, while it also plans to expand on the health coaching that it's launching in its new smart-mechanical hybrid. "The coaching part is the main area where I believe we should invest in and break into". Can that be done without a screen? We've seen the Nokia Steel HR and Garmin Vivomove HR find ways around the problem.

"I think everyone is trying to find the right way there, so it's not too late yet," says Stas, who admits that Frederique Constant, like so many other companies, are still exploring what people even want in a smartwatch. Diving deeper into health seems wise and could put Frederique Constant ahead of many of its peers. However it moves forward, the company knows it must adapt.

Switzerland might not be fucked yet.


  • Gadgety1 says:

    Peter Stas is brutally honest with the predicament the Swiss watch industry is in, and he also understands what smartwatches are about "these watches become indispensable to people; they create a certain stickiness that was not there before."

  • Extraneus says:

    I'm not convinced... Having purchased their first Apple Watch and found little relative use for it, will people be forking out another couple hundred bucks for a new one two years on? And again four years on? Unlike a traditional watch, which can easily be a once-in-a-lifetime purchase

  • Gadgety1 says:

    @Extraneus. I guess it depends on your usage pattern. The number of watches sold by Apple in 2017 is estimated at 15 million units. The entire Swiss wrist watch unit production was 25 million in 2016. TAG Heuer sold 56 000 units of their first iteration $1500 Android Wear smartwatch in its first year, 2016. That's roughly 8% of TAG's total annual production, and was beyond TAG management expectations (they allegedly raised production to 2000 a week, from 1200 after just a few months). So even though you're not convinced, buyers are there. You bring up a very important point, that smartwatches are more of a consumable than a once-in-a-lifetime purchase. As you probably know TAG has attempted to bridge that by offering a replacement mechanical movement, something they've expanded on in their 2017 launch, making the Connected 45 replaceable even with a Tourbillon movement. 

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