Swatch Group makes plans for connected watches

In a busy week, Swatch Group’s announcement of its partnership with the Swiss Centre for Electronics and Microtechnology (CSEM), based in Neuchâtel, to develop a Swiss Made “ecosystem” for connected devices came hot on the heels of news that Apple Watch shipments “probably” reached 5.2 million in Q4 2016. If this is the case – Apple continues to shroud sales numbers in mystery – 25 million Apple Watches have been sold since the roll-out in September 2014; the equivalent of annual production of Swiss watches. For some, this signals victory for the connected watch, while the Cupertino firm continues to boast it is the number-two watchmaker in the world in revenue, second only to Rolex.

Bragging aside, the smartwatch market slowed in 2016, growing by just 1.5% to around 21.1 million units according to Strategy Analytics. Elsewhere, analysts are pointing to a significant decline in sales to 18 million units. This is hardly opening the floodgates, even though Apple continues to dominate the market at 55% with Samsung trailing at 12%. Also, the 11.6 million Apple Watches sold in 2016 are equal to more or less half the number of watches leaving Switzerland, but what of China, comparable in terms of market segmentation, and its 700 million watches a year?

Proprietary system

Whatever the case, connected watches have clearly won a share of wrist real estate. Whether they have done so at the expense of traditional timepieces is another question that certain Swiss makers are avoiding by joining the fray. First up is TAG Heuer, which expects to triple sales of its TAG Heuer Connected to 150,000 units, followed by Frederique Constant and Breitling, not forgetting Swatch Group products which include the Bellamy and the future smart T-Touch from Tissot. In terms of unit sales, they are clearly a far cry from the household names in consumer electronics, but Swatch Group’s announcement could change all that. What message can we take from this? That the Biel-based group, having patiently observed the market and even tested the potential welcome consumers would give its products, including in China, believes there is a future for the connected watch? This partnership with CSEM would suggest so, particularly as previous collaborations, such as silicon components for mechanical watch movements, have produced strong results.

The Swatch Group-CSEM solution involves a proprietary operating system, the first of its kind, that will have the Swiss Made label. In a press release, CSEM states that “the ecosystem, which is bespoke and designed right from the start for miniaturisation, will consist of a combination of an operating system, integrated circuits for data processing and transmission, as well as development tools, all of which are optimised to operate together to maximize self-sufficiency and guarantee security. This will be the first time that such a holistic approach has been used anywhere in the world for connected objects. We are aiming to launch the first products by the end of 2018.” By which time Apple might be releasing its sales figures?