Swatch’s Strategic Reversal on Smart Watches

swatchs-strategic-reversal-on-smart-watches

Swatch is the biggest watchmaker in the world, with revenues of more than $9 billion in 2014. There has been a lot of attention on what the Swiss watchmaker will do in the smart watch space – whether it will try and change with the times, partner with technology companies on producing a smart watch, or just focus on their traditional watch business. In the past, Swatch has been skeptical about smart watches but now they seem to have changed their mind and are expected to launch a smart watch in the next 3 months, close to the Apple Watch launch.

Rather than working with Apple on smart watches, Swatch has decided to compete against them, with Windows and Android apps supporting their watch. This doesn’t surprise me, as Apple might be wary of having a Swatch smart watch app sit on their app store competing directly with the Apple Watch.

We don’t have many details on what the watch will look like, whether it will be a full touchscreen interface, or whether there be traditional analog dials blended with smart features. However, Swatch’s plans for tackling battery issues might provide some clues.

Swatch has said that their smart watch will not need to be charged. They could either be using some sort of kinetic energy to charge the watch on a continuous basis, or they may have a new battery technology. This also suggests that the watch will most likely use an embedded OS and have a limited digital display, or possibly an e-ink monochrome display that draws less power. If they indeed have a full touchscreen watch with high-resolution color display that doesn’t need charging, Swatch might be on to something unique and disruptive. It must be noted, though, that Swatch is known to have filed a record number of patents in 2014, which includes materials for new batteries.

Swatch will also support payments through NFC on the smart watch. They are trying to set up their own payment system and are known to be talking to retailers. If that is the case, it is going to be very hard for Swatch to push their own payment system, in addition to Apple and all the other competing mobile payment systems like MCX, CurrentC, Softcard, and others.

Although Swatch is known for its iconic, colorful watches that are typically priced at the low end of the market, they also own several luxury brands including Omega, Tissot, Breguet, and Longines. If you read between the lines on the announcement, Swatch isn’t really interested in launching a luxury smart watch, but rather something that competes with Apple in the $300 to $400 price range, possibly even lower. Not supporting Apple iPhones could be an issue, as a lot of Swatch’s target demographic could be iPhone users who possibly don’t like the Apple Watch and want something with longer battery life.

Overall, this news does indicate that the Swiss watch industry has taken notice of the Apple Watch, but it’s unclear if it really has the means of competing in the smart watch space. Regardless, according to analysis in Tractica’s upcoming report on Smart Watches, Apple will overtake Swatch as the biggest watch company in the world by the end of 2016, and there isn’t much that Swatch can do about it.

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