Swatch’s approach differs from LVMH. A staff member of LVMH 
demonstrates a new Tag Heuer Connected Modular 45 model watch after its presentation in Brunnen, Switzerland recently.Photo: Reuters
Zurich - Swiss watchmakers are diving further into the unproven smartwatch market, with Montblanc, TAG Heuer and Tissot seeking to attract younger shoppers with a technology the industry largely snubbed until consumers began turning away from traditional timepieces.

Last week TAG Heuer unveiled the new generation of a $1650 (R21000) smartwatch it makes with partners Google and Intel. Two days later, Montblanc followed with the $890 Summit. This week Swatch Group chief executive Officer Nick Hayek also announced plans for a Tissot connected watch using a proprietary operating system.

With the flurry of new gadgets, watchmakers are trying to attract millennial shoppers in the middle of the longest downturn on record for the Swiss industry. Yet sales of smartwatches so far have underwhelmed, even for giant Apple Inc and the new tech-driven timepieces generally command lower prices than the Swiss industry’s output, creating risks for brands that have jumped in. “The smartwatch market hasn’t necessarily been as big an engagement as some thought it would be,” said John Guy, an analyst at MainFirst Bank.

Price

They’re dabbling in smartwatches as a way to lure younger shoppers - who often don’t wear any watches, smart or otherwise. Prices of Montblanc’s traditional watches run as high as $10000, more than 10 times the price of its new gadget, while TAG Heuer’s most expensive models extend to about $15000. 

Swiss watchmakers have insulated their high-end brands from the trend, seeking to preserve the exclusivity of more traditional timepieces. The top five brands by sales, as ranked by analyst Rene Weber at Bank Vontobel - Rolex, Omega, Cartier, Patek Philippe and Longines - have stayed out of the smartwatch market.

Read also: Swatch takes on Apple, Google

The releases represents a change of heart for Richemont, which owns Montblanc, and Swatch, which produces Omega. Richemont chairperson Johann Rupert has said his brands planned to make only “intelligent watchstraps” and putting electronic functions into the watch case created a danger of obsolescence for time-honoured watchmaking practices.

Swatch chief executive Nick Hayek has said he doesn’t expect smartwatches to be a “revolution”.

TAG Heuer wants smartwatch buyers to upgrade. With its first device, customers could pay extra to replace it with a traditional timepiece if they decided it was obsolete. For the new version introduced this week, TAG Heuer is offering a module for an extra $1650 that can swop the smartwatch with a mechanical time face.

Failures

Google’s Android operating system is behind a number of smartwatches, including Montblanc’s new gadget. The US tech firm has partnered with LG, and last month Huawei launched the company’s Watch 2. Smartwatches from Motorola, Sony and Fossil also run Google’s operating system.

High-profile failures, such as the death of a $17000 luxury version of the Apple Watch, are easier to count than successes. Market researcher IDC declared this month that “wearables aren’t dead,” but growth in the category is erratic.

IDC estimates that 19.8million smartwatches were shipped last year, missing a forecast of 28.3million. Of the top five wearable makers, Apple’s volume dropped 7.9percent last year while shipments at Samsung rose 39percent, according to the firm. Switzerland exported 25.4 million wristwatches last year, says the Federation of the Swiss Watch Industry.

The mixed results for tech giants have eased some fears in the Swiss industry, which has reported signs of sales bottoming after 19months of declining exports. This week Swatch forecast a rebound in US and European markets.

Guy estimates that TAG Heuer got less than than 10percent of its sales from its first-generation smartwatch last year.

If the technology remains a niche product for the Swiss makers, that might be a good thing, he says. Otherwise, they risk lower-priced timepieces undercutting their sales.