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Smartwatches: and the winner is…

Smartwatches: and the winner is…

Monday, 08 June 2015
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Christophe Roulet
Editor-in-chief, HH Journal

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3 min read

The market for connected watches in 2015 should be worth around $8.9 billion with 30 million smartwatches sold. Ninety brands are currently battling it out in a segment so far dominated by Samsung, pending Apple’s results. Swiss fine watchmakers are unperturbed.

Sales of the Apple Watch are probably the best-kept secret in the connected watch market. Two months after the start of pre-orders, speculation is rife, fuelled by the Cupertino firm’s refusal to communicate on the subject. Citing tracking methods used by developers who have worked on apps for the Apple Watch, Global Equities Research estimates that more than seven million orders have been placed to date, with some two and a half million already shipped. This would suggest Apple is on course to sell between 40 and 42 million of its watches by end December at an average USD 575 a pop. This is, of course, a high estimate: as French daily Le Monde confirms, analysts are agreed on a figure in the range of 20 to 30 million units. KGI Securities, whose research and analysis department is a reference in the field, has lowered its forecast to 15 million shipments this fiscal year.

At this stage in the game, numbers are all-important, and Vontobel’s annual survey is certainly a goldmine. According to the Swiss private bank, based on information supplied by Smartwatch Group, 6.8 million connected watches were sold in 2014 with an average ticket of USD 189. This gives a total market of USD 1.29 billion, up 82%. No fewer than 90 companies have jumped on the bandwagon to date. Samsung and Lenovo/Motorola have so far grabbed the lion’s share, although firms offering health- and fitness-related applications such as Garmin, Fitbit, Withings and Polar are giving the electronics giants a run for their money. On these grounds, sales (including Apple) are forecast to reach USD 8.9 billion this year (30 million units), USD 21 billion in 2016 and USD 41 billion in 2017.

And in return?

All of which begs comparison with Swiss watches, and more particularly those in the entry-level segment, i.e. with an export price under CHF 200 (retail price under CHF 600), which potentially faces the most competition from the connected watch. In 2014 watches at this price point accounted for 64% of total Swiss watch exports, selling 18.4 million units. These volumes are clearly important for the industry, although the segment carries significantly less weight in value terms at CHF 1.25 billion (export prices) which amounts to just 5.9% of Swiss watchmakers’ international revenue. In number of units, sales of connected watches are likely to overtake sales of entry-level Swiss watches this year already.

A market which still leaves the majority of fine watch brands cold.

Some Swiss manufacturers have retaliated with their own smartwatch. Montblanc (Timewalker E-Strap), Bulgari (Diagono Magnesium) and Breitling (B55 Connected) have targeted the high-end segment while Mondaine (Helvetica No 1) and Frédérique Constant (Swiss Horological Smartwatch), both of which incorporate MotionX technology, are aimed at a lower price point. Yet to come is TAG Heuer – the brand is working with Google and Intel – and Swatch Group which has already made incursions into smartwatch technologies. Its NFC-based devices which do not require battery power are expected any time now. With NFC (near field communication) tipped to become the standard for payment and access control, the implications of this market are huge. A market which, let it be said, still leaves the majority of fine watch brands cold.

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