Will 20-40 Million Apple Watch Shipments Pressure Swiss Watch Industry?
Sales expectations for Apple’s (AAPL) Watch are all over the place, with even the more cautious outlooks, such as Toni Sacconaghi’s, a Bernstein Research senior analyst, who projects shipments will begin at 7.5 units for 2H 2015 but advance to 20 million to 40 million over the first four quarters of availability.
At those shipment levels, will Apple’s Watch threaten the 400 year-old, Swiss traditional watch industry? Elmar Mock, who helped create the Swatch watch some 30 years ago, thinks so.
“Apple will succeed quickly,” Mock told Bloomberg Business. “It will put a lot of pressure on the traditional watch industry and jobs in Switzerland.”
Switzerland watchmakers exported some 28.6 million watches in 2014, almost half a million more than in 2013, according to WtheJournal.com website. With the Apple Watch starting at $349 for the Sport model and $549 for a midrange device, any Swiss watch “in the price range of 500 francs to 1,000 francs is really in danger,” said Mock.
As for Swatch’s business, Barclay’s said in an investor’s note it expects Apple’s Watch could slash sales at the Swatch Group by as much as 6 percent.
Even though some traditional Swiss brands are tiptoeing into the smartwatch market, in general, the Swiss watch industry has underestimated the threat Apple’s Watch poses, Mock said. “I do expect an Ice Age coming toward us,” he said.
But others are unconvinced.
“The digital revolution has done little thus far to muffle mechanical luxury demand,” said Deborah Aitken, a Bloomberg Intelligence analyst.
And, Jean-Claude Biver, Tag Heuer interim chief executive and parent LVHM’s watch chief, told Bloomberg Business in an email, “I wouldn’t call the Apple Watch a threat for the industry,” adding he expected the device to prompt more young people to buy mechanical watches.
Last December, Biver, reportedly a former smartwatch skeptic, said he’d given the go-ahead for Tag Heuer to develop a smartwatch slated to appear on the market before the end of the year. The device is expected to feature health functions and is being developed in collaboration with partners outside of Switzerland.