Editorial: New Reports That Smartwatches Pose Heightened Threat To Swiss Watch Industry May Paint Misleading Picture

If you follow news about watches, and smartwatches, there's an excellent chance you've seen a widely breaking story today about how, for the first time in history, the sales of smartwatches have surpassed sales of Swiss-made watches. It's easy to read all sorts of doom and gloom into this, but let's take a look at what the story really does, and doesn't, mean.

The story, as reported here, here, and here, is based on a newly released report from the firm Strategy Analytics, with Barron's reporting: "Strategy Analytics estimates all smartwatch sales globally totaled 8.1 million units in the three months ended in December, versus 7.9 million units for the Swiss watch business."

Those figures would seem to paint a pretty gloomy picture, and CNET notes that smartwatch sales for 2016 could hit $11.5 billion this year, with Apple leading the way. Neither Apple nor Samsung break out smartwatch sales figures specifically, but according to TechCrunch, Apple currently is estimated to have over 50% market share, with Android smartwatches representing less than 10% of the remainder.  

However, though Swiss watches may not be beating smartwatches in sheer numbers, the Swiss watch industry – while admittedly undergoing some major challenges thanks to factors as varied as a dramatic drop in sales in China and the consequences of unpegging the Swiss Franc from the Euro – is still far ahead of the smartwatch market in sales value. Figures from the Federation of the Swiss Watch Industry FH showed total sales last year of about 22.5 billion CHF – nearly double what the smartwatch market could earn if this year is its best year in history. Moreover, those figures are export figures, while the figures from CNET are retail – so the disparity is even more dramatic.

It seems intuitively obvious that smartwatch sales should be hurting sales of Swiss, and other, mechanical watches, but the actual effect is very hard to capture and almost certainly varies dramatically with such factors as price segment, geographic region, and so on. While it's true that these are challenging times for the Swiss watch industry for many reasons, the Strategy Analytics report isn't a sign of the death knell for Swiss watchmaking by any means. Absent any other data, all it really tells us is that people are buying a lot of smartwatches. And given the fact that at least in come cases, that means people who weren't interested in watches at all are now getting into them, it may even bode well for the Swiss watch industry over the long run.

Check out our most recent coverage of the Apple Watch right here.

For our initial thoughts on the Apple Watch at launch, click here.

To watch Kevin Rose's review of the TAG Heuer Connected smartwatch, click here.

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