Sep 01, 2014

    Swatch cool to smartwatch tie-ups with tech giants


    SWATCH Group is happy to go it alone with a launch next year of watches with "smart" features to compete with so-called wearable gadgets from the big tech companies, a market potentially worth US$93 billion (S$116 billion).

    The world's biggest watchmaker, which sees the advent of smartwatches as an opportunity rather than a threat, will unveil its new Swatch Touch line next summer.

    Swatch chief executive Nick Hayek said these watches might allow the wearer to count the number of steps they take and calories they burn.

    There will be a few other cool "Swatchy" things on offer via the latest Bluetooth technology, he said in an interview at the company's headquarters in Biel.

    "All the big technology firms want to work with us and I don't rule out that we are or could be collaborating in some areas. But we can also do many things on our own."

    Wearable gadgets - such as smartwatches that allow users to connect to their phone to check e-mail messages, make calls or monitor their health - are expected to be the next big thing in the tech world and a potential threat to traditional-wristwatch sales.

    Apple has just invited the media to a "special event" this month, fuelling speculation it might present a much-anticipated "iWatch".

    The possibility of an iWatch launch is partly responsible for Swatch shares losing almost 15 per cent so far this year, lagging a 3 per cent rise in the European sector.

    "For Swatch, this could mean a 2 per cent hit to revenue and earnings before interest and tax for each 10 per cent share that the iWatch is able to gain in its addressable market," Bernstein analyst Mario Ortelli said in a study in July.

    Other tech companies are working on smartwatches. Google's Motorola is set to launch a Moto360 smartwatch this week in the United States.

    For many analysts, Swatch and Apple would be the dream team for a smartwatch project, but the former has always played down its interest in such a relationship. The argument is that Swatch's business is selling watches, not technology.

    "Our first message for customers is the watch. If they like it, they might also be interested in the extra functions," Mr Hayek said.

    "It is a problem if you define a product only by its technology. Technology alone doesn't sell, not in watches."

    His comments highlight the importance of fashion and branding for the development of the smartwatch business.

    "(Technology firms) that want to strike partnerships with us also want access to brands. They want (their products) to be more than a commodity," the CEO said.