Swatch watches
by David Barth
written June 2003
Swatch
The History of Swatch
SSIH was formed in 1930 through the merger of Omega and Tissot. (See Omega). SSIH also purchased companies that produced movements and finished watch
brands in the lower price segment.
ASUAG was a Swiss watch holding company founded in 1931. It gradually expanded its General Watch Co. Ltd. (GWC) subsidiary through the acqusition of
companies that manufactured movement-blanks and those that assembled finished watches.
By the 1970s, the Swiss watch industry faced fierce world competition, especially from the Japanese who were able to mass produce and market inexpensive,
accurate quartz watches. Sales for both SSIH and ASUAG were declining, and they faced liquidation. Some foreign competitors were interested in purchasing the
Omega, Longines, Tissot, and other brands, but Swiss watch interests wanted to keep them in Switzerland.
Nicolas G. Hayek, the CEO of Hayek Engineering and eventually to become the Chairman of the Board and Chief Executive Officer of the Swatch Group, received an
assignment to assess the chances of survival and to develop a strategy for the future of ASUAG and SSIH.
In 1983, as a result of the Hayek Study, ASUAG and SSIH merged to become the "Swiss Corporation for Microelectronics and Watchmaking Industries," shortened to
the letters "SMH."
To combat competition in the low-cost market, SMH's subsidiary, ETA, designed a low-cost watch containing only 51 parts compared to over 100 parts for traditional
watches.
The design of the Delirium Watch
Prior to the merger of SSIH and ASUAG, a Swiss research project was begun in 1979 by ETA, a subsidiary of either SSIH and ASUAG, to develop an ultra-thin watch.
That watch was named the Delirium. The research for the design of the Delirium was helpful in ETA's later design of an inexpensive watch with fewer parts.
The Delirium watch which had a thickness of 1.9mm and was the world's thinnest wristwatch, in part because it had a limited number of components.
Ernst Thomke, a member of the technical team from ETA that developed the Delirium, had to secretly buy patent rights from Erard SA to manufacture certain parts
because ETA's facility in Grechen, Switzerland was forbidden by Swiss law to produce coils and work with plastics. Most of the Research and Development was done
in secret. Nicholas Hayek, at the time an advisor to the watch industry, supported the project and played a key role in ensuring that progress continued and that the
design secrets stayed in Switzerland.
The design of the Swatch Watch
After designing the Delirium, Thomke designed the technical specification for an inexpensive watch, that would cost around USD$20, because it had only 52 parts as
opposed to 90 to 150 for other analog quartz watches.
Among the missing pieces was the bottom plate. Instead of being attached to a bottom plate, the parts were assembled directly on the inside of the case, a technique
ETA had employed in its Delirium watches. Another cost-saving measure was the welding of the case instead of screwing it together, making it a disposable watch. The
watch was assembled automatically from start to finish, which also decreased manufacturing costs.
How "Swatch" got its name
ETA test-marketed its new, inexpensive watch in the U.S. in 1982, but it was a failure. Then ETA changed its marketing concept and advertised it as the 'second watch'
suggesting to consumers that even though they already owned a watch, a second, inexpensive, colorful watch would be nice to have to complement their wardrobe.
'Second watch' was eventually shortened to 's'watch, or Swatch.
In 1983 when ASUAG and SSIH merged to become SMH, ETA, as a subsidiary of either ASUAG or SSIH, also became a part of SMH. SMH launched the first Swatch
product line on March 1, 1983.
Due to the great name recognition of "Swatch," in 1998 SMH changed its name to "The Swatch Group, Ltd."
A Swatch Stopwatches anecdote
On May 1, 1993, Swatch Singapore ran a full page advertisement in the Straits Times to launch the first set of Swatch stopwatches. It was stated in the advertisement
that the watches were in "limited" supply, costing "S$120 each", "whilst stocks last". A line started to form outside the Swatch boutique on Orchard Emerald road
around 9am. Many interested parties were first time collectors.
Customers bought the stopwatches only to find, a few weeks later, that the "Coffeebreak" and "Jess'Rush" stopwatch models were for sale in many outlets at a retail
price of S$90, lower than the original price of S$120, resulting in a 25 percent depreciation in two weeks.
Swatch Models
Swatch Watch - This is a watch in a plastic case
Swatch Chrono
Swatch Irony - a Metal Swatch
Swatch Solar - This is a solar powered watch
Swatch MusiCall - This watch has an alarm clock
Swatch Automatic
Swatch Beep - This is the world's first pager in a wristwatch
Swatch Access - This is a watch with a function that can be used as a ski pass at many ski resorts
World's Largest Watch Manufacturer
The introduction of the Swatch watch marked a turning point for the Swiss watch industry, which had suffered from its late entry into the quartz-watch arena. Swatch
proved that Switzerland was still capable of technological innovation and could compete effectively with Japanese companies in making quartz watches.
By 1987, 50 million Swatches had been sold worldwide. The watch became a collectible, and some of the rarer Swatches bring high prices at auction. In 1991, a
Swatch designed by Kiki Picasso inspired a bid of 62,000 Swiss francs (more than USD$40,000).
By 2000, The Swatch Group Ltd. In Biel, Switzerland, owned 18 watch brands and was the largest manufacturer and distributor of finished watches in the world,
manufacturing 25 percent of total world watch production. In 2001 the Group produced 114 million watches, movements, and stepping motors, with yearly sales of
4182 million Swiss francs (about USD$2.7 billion).
The Swatch Group has 160 production centers in the following locations:
Switzerland
France
Germany
Italy
USA
Virgin Islands
Thailand
Malaysia
China
Other Swatch Technologies
The Swatch Group does research and development in microelectronics, micromechanics, telecommunications, automobiles, services, computers, medical
applications, and electronics.
The Swatch Group produces finished watches as well as movements and components made by ETA, Nouvelle Lemania, Frédéric Piguet, etc. It produces nearly
all of the components for its eighteen watch brand companies as well for the entire Swiss watch industry and for some watch companies outside
Switzerland.
Swatch Group Divisions:
Endura - Swatch Group manufactures private label watches including the Endura
Swatch Group Research and Development
Microelectronics
Micromechanics
Telecommunications Sector
With its products from Swatch Access (wireless access control, internet access, and Swatch e-commerce in the USA) and the Swatch Talk (the telephone in the
watch), Swatch is active in the telecom and Internet business.
Automobile Sector
Swatch entered into a joint venture with Mercedes of Daimler Chrysler in 1998 to develop the city car, "SMART."
Medical Sector
Services Sector
Timing sports events for Olympic Games in Athens, Greece, Torino, and Beijing, etc.
Swatch Retail Outlets
The jewelry collections of Breguet, Swatch, Omega, and Léon Hatot are available in retail outlets in the form of single-brand stores which include Swatch, Breguet,
Blancpain, Glashütte Original, Omega, and multi-brand boutique stores in the top segment under the name of "Tourbillon".
The Tourbillon Boutique offers all the brands of the Swatch Group luxury segment: Breguet, Blancpain, Jaquet Droz, Glashütte Original, Léon Hatot, and
Swatch.
Watch Wardrobing
Early Swatch watches had plain, utilitarian look with solid-color faces and straps, in red, brown, or tan. Later, stripes, checks, arrows, polka dots, and flags started
appearing on Swatch faces.
Swatch kicked off a major new trend in watch marketing. It was the first watch to be marketed as a fashion item to be purchased in multiples and changed to fit one's
outfit or mood, a concept that came to be known in the industry as "watch wardrobing." The company also manufactures theme collections.
Swatch Competition
Swatch inspired other brands to take a similar approach, offering collections of relatively inexpensive watches, sold as fashion accessories, chiefly in department stores.
Guess and Fossil, launched in the mid-1980s, are the best known. Others include Kenneth Cole, Emporio Armani Orologi, cK, and Perry Ellis.
While some companies were focusing on fashion, others continued to push electronic technology ever further. In 1982, Seiko launched a watch with a tiny TV screen.
That year, Casio came out with both a thermometer watch and a dictionary watch that could translate 1,500 Japanese words into English. In 1983, Seiko introduced the
first quartz analog chronograph. In 1987, Casio came up with a watch that could dial your phone, and Citizen launched its Voice Master VX-2, which reacted to the
human voice.
By the mid-1980s, quartz watches were very accurate, low-maintenance, sturdy, and sleek. The compactness of quartz movements also allowed watch companies to
incorporate a large array of functions that would be impossible in mechanical watches.
Mechanical Watches
Nearly all watch manufacturers were making quartz watches except for a few Swiss brands including Patek Philippe and Rolex who continued to produce the majority
of their watches with mechanical movements. For many young consumers the mechanical watch was a novelty. Older consumers associated mechanical watches with
simpler and better times. For them, a mechanical watch was a piece of the past. Still others appreciated the workmanship required to make a fine mechanical watch,
and they liked mechanical watches for aesthetic reasons.
In the early 1990s, people started collecting vintage wristwatches and major auction houses began holding sales devoted to them. Demand grew and prices ballooned.
A group of "big five" brands emerged, those that brought the very highest prices in the vintage market: Patek Philippe, Rolex, Audemars Piguet, Vacheron Constantin,
and Cartier.
The most complicated and rarest pieces are most coveted by collectors. One thing nearly all the collectible watches have in common is a mechanical movement.
Swatch, the Bulova Accutron, and the Hamilton Electric are the exceptions.
As watch companies saw how appealing old mechanical watches had become, they started making new ones once again. Many brands, including Girard-Perregaux,
IWC, Audemars Piguet, and Jaeger-LeCoultre regained prominence on the strength of their mechanical watches. In 1982, Jean Claude Biver, a former Omega executive,
showed notable prescience when he resurrected a dormant brand named Blancpain and pledged that it would consist only of mechanical models. The brand's
advertisements boast that Blancpain never has and never will make a quartz watch.
The mechanical-watch craze was especially strong in Italy. That's where the first consumer watch magazine, Orologi, was launched in 1987, devoted almost entirely to
high-end Swiss mechanical watches. Several other such magazines followed. Italy was the birthplace, in the mid-'80s, of the passion for mechanical chronograph
watches. It was there that Breitling's, which specializes in pilots' chronographs, soon spreading all over the globe.
The mechanical revival bolstered the Swiss watch industry. The decade that had started with a funeral dirge for mechanical watches and their Swiss makers ended
with the sound of champagne corks popping. By 1989, Switzerland was once again the world's largest watch exporter. Half the money spent on watches worldwide
was spent on Swiss ones. Japan, the second-biggest exporter, accounted for 26% of money spent. Nearly 40% of Swiss exports, in value terms, were mechanical
models, quite a recovery considering the mechanical watch's brush with death just a few years before.
Swatch Group High Cost Segment
Breguet
Blancpain
Jaquet-Droz
Glashütte-Original/Union
Léon Hatot
Omega
Longines
Rado
Swatch Group Mid-Cost Segment
Tissot
Calvin Klein
Certina
Mido
Hamilton
Pierre Balmain
Swatch Group Low-Cost Segment
Swatch
Flik Flak - This is a children’s watch designed to teach them to tell time.
Swatch Group Component Manufacturers
These companies manufacturer movements and other components for their parent company, Swatch, other Swiss manufacturers, and some watch makers
outside of Switzerland.
ETA
Nouvelle
Lemania
Frédéric Piguet