Is Swatch Looking Down the Barrel of Disruption?
Ten years ago Swatch introduced an early smartwatch based on Microsoft’s Smart Personal Object Technology (Spot). Microsoft used FM radio signals for connectivity, broadcasting bits of info such as headline news and the weather. It was an early and reasonably exciting attempt at the Internet of things. Swatch’s Spot-based Paparazzi series of watches even promised to help users track their favourite celebrities. Everyday objects were getting connected and Swatch along with several other watch brands took a plunge into the IT domain. Within four years the excitement faded and the products were discontinued.
Entering a new market is always a question of timing. Products rarely take off the first time out. Tablets were all the rage back in 2000 when devices like 3Com’s Audrey had mega stands at major tradeshows. The products received media attention and looked like they could be a major disruptive element in the IT industry. But most of those early tablet-like devices were discontinued shortly after launch or never released. The Audrey tablet was on the market for half a year. It was hit by some bad luck and faced an audience that wasn’t ready for a $500 Internet consumption screen. Few households had broadband connectivity. Audrey gets little credit for being too early to the tablet market.
If Swatch entered the smartwatch market too early a decade ago, observers are wondering if it is entering too late this round. And too independently. In media interviews, Swatch’s CEO, Nick Hayek, indicates that the company will introduce smartwatch-like features next year, but the products will continue to be traditional timepieces first. And unlike in 2004 when Swatch partnered with Microsoft, it appears that Swatch might not adopt a third-party platform for its connected watches. The most obvious candidate would be Google’s Android Wear, providing a ready library of wrist-optimised apps and programming tools. Swatch would not be the first company to have concerns about its products becoming commoditised by the Android market.
Earlier this year there were rumours that Swatch was working with Apple to develop a smartwatch with broad market appeal. CCS Insight believes that it is unlikely that any partnership between the two would result in a co-branded smartwatch, though Swatch might be exploring Apple’s HealthKit for storing health-related data collected from sensors on the watch. (See our opinion on reports of Apple partnering with Swatch for iWatch here).
Swatch owns a wide portfolio of watch brands with various prices, from very low to very high. Swatch makes sporty Tissot watches as well as Longines, Omega and Breguet timepieces. Swatch also makes watch components for third parties. This includes microchips, displays and batteries. Swatch certainly knows its business very well, but as is often the case, real industry change comes from adjacent areas. Being dismissive of non-traditional entrants and apparent industry shifts is what market myopia is all about. When Smart introduces watches with its Swatch Touch interface in the summer of 2015, it will be about a year behind some flagship products.
Like the makers of pagers and point-and-shoot cameras, watchmakers could be stung by the effects of convergence over the coming few years. If smartwatches become a consumer staple and Swatch does go it alone, the company could have little time to establish a competitive ecosystem.
Subscribe to our blogMake sure you don't miss out on our fresh insights on topical news in the connected world
"*" indicates required fields