Corgémont, Switzerland — Let the smartwatch battle begin.
Swatch Group on Thursday issued its long-awaited response to the new Apple Watch with a family of touchscreen “smart” timepieces aimed to appeal to a range of specialist interest groups. Starting with the Swatch Touch Zero One, going on sale by the summer, the family will launch with five models, each expected to sell between 500,000 to 1 million units, predicted Swatch chief executive officer Nick Hayek.
In introducing Swatch’s own smartwatch, Hayek took a jab at rival offerings — while praising Apple’s new version.
Speaking at the group’s annual media conference, Hayek stressed Swatch was not in the business of producing slimmed down mobile phones, but rather, extending the use and practicality of timepieces.
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“We don’t do the reduction of the mobile phone to the wrist. We’re not in consumer electronics. Other people do that. We are a watch company.”
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Asked specifically about the Apple Watch, which some analysts think will cut sales of conventional Swiss timepieces, Hayek heaped praise on the California-based company. “They did a very nice smartwatch if you compare it to Samsung, Sony and all the others.”
But he argued Apple’s product was an opportunity, not a threat, given the growing tendency of young people, especially in the U.S., not to wear watches at all. “It’s a fantastic opportunity for us. Let Apple do the work: I congratulate them.”
While not criticizing Apple, Hayek emphasized the practicality of Swatch’s new products. They would have a battery life of at least nine months, probably a year, were waterproof and could have their batteries changed by anyone, using a standard, low-priced Swatch battery as replacement. And the new Swatch range was far cheaper.
“There are simpler solutions that bring much more practical advantages to the customer,” he said. “We want to give consumers technology at an accessible price.”
Swatch has taken an extremely focused — and niche — approach to its smartwatches. For example, the Swatch Touch Zero One, a sporty, rectangular wristwatch and performance tracking device, will focus on beach volleyball, with features that go down to measuring the calories consumed in clapping. The watch will sell for 135 Swiss francs, or $134 at current exchange — the same as expected for the rest of the range.
The Zero Two, due for the winter season, is geared to skiers; the Zero Three, expected next spring, will target surfers, and the Zero Four will appear in time for next year’s Rio Olympic Games, of which Swatch is a major sponsor. A fifth product, also due in 2016, will feature special cooking applications. Each product will contain special sensors appropriate to its targeted audience.
Initial reactions were positive. “It’s a really interesting first step,” said Jon Cox, watch analyst at Kepler Cheuvreux. “We just don’t know how the market will develop. But there’s room enough to go around.”
Hayek also raised the possibility that Swatch’s new watches — and many of the group’s existing mechanical and electronic timepieces — could soon incorporate so-called near field communications technology — vastly broadening their functionality. That would stem from incorporating know-how from some of the group’s microelectronics and battery subsidiaries, which are among leaders in their fields. That innovation would build on radio-frequency identification technology, used in stock tracking in retail and industry. Swatch’s original Access watch — which could be loaded with a ski pass — was produced more than a decade ago.
The arrival now of broad industry standards has made NFC technology — and its incorporation in watches — more commercially appealing. The technology is being used wisely in contactless retail payments, but also has a vast range of potential other applications, which could be loaded via computer onto a suitably equipped watch.
“It can be personalized and configured to your own needs,” the ceo said.
Hayek said future group products could be made NFC-compatible for as little as an extra 2 Swiss francs, or $1.98, in manufacturing costs apiece. He hinted the new technology could be seen in products surprisingly soon.
As a foretaste, he said Swatch Group had already reached agreement with China UnionPay, the Chinese payments operator, an unnamed Swiss bank, and a leading world credit card company. Hayek declined to name the latter, but said it was also a top Olympics sponsor — pointing inevitably to Visa.
Also on Thursday, Hayek revealed group sales in the first two months of 2015 had been “excellent” despite disruption following the Swiss National Bank’s surprise abolition in January of its ceiling for the Swiss franc’s exchange rate against the euro. The move prompted a steep rise in the franc’s value against the euro, though the impact has been less severe against the dollar, pound sterling, and some other major currencies.
“In local currencies, the Swatch Group sees very good results everywhere in the world. That is not only in terms of sales, also profits,” Hayek said. The upbeat trading news and new product announcements lifted Swatch shares by 2.35 percent to close at 430.80 Swiss francs, or $429.24 at current exchange, in trading on the Zurich Stock Exchange Thursday.
“The outlook for Swatch Group in 2015 is excellent. It will be a very dynamic, a very good year,” he added.