Hybrid watch market to grow more than three times faster than for touchscreen models

A study by Juniper Research has estimated that sales of hybrid connected watches will soar to 80 million units in 2022 from 14 million in 2017.

The report also suggests that there will be a 50/50 split in the connected watches market, with analogue hybrids and touchscreen models like Apple Watch each accounting for 50% of the market.

Touch screen models are currently ahead in unit shipments, but while that market is expected to grow by 160% by 2022, the hybrid market will expand by 460%.

“We started in 2015 with Horological Smartwatches. Both Frederique Constant and Alpina smartwatch collections have been growing in past years. The horological smart watches now account for around 12% of our sales, so it has developed into an important category.”

“I feel that the Swiss watch industry still doesn’t understand how much the Apple watch and other smart watches have eaten into the figures, particularly the figures for quartz movements. The Apple Watch Series 3 is the next level, which moves from notifications and fitness tracking to health orientation. I think this is where we will start to see the true benefits of the smart watch and once again Apple is in the lead. They are starting to inform people if their resting heart rate is too high and are even branching out into medical information. Apple has sold 18 million watches and when I go to the US I see more and more people wearing Apple Watches. The Apple Watch is now in its third generation and who knows what they will bring with the fourth generation. If they start to adapt the case and have something other than just a black screen then the Swiss watch industry could be heading for trouble. I still say quite frankly that many of my colleagues in the industry don’t know what is happening.”

Hybrid Manufacture Smartwatch

We are proud to introduce a new World’s First: The hybrid smartwatch collection, the Hybrid Manufacture, the first to fuse tech with a mechanical manufacture-made movement.

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Hybrid Manufacture Movement

 

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Image courtesy of Blogtowatch

Back in 2015, we introduced the Horological Smartwatch, but these have quartz movements. A lot of people have since been asking for a smartwatch with a mechanical movement, and the Hybrid Manufacture is the first to accomplish just that, arriving on the scene in four 42mm styles.

We did some complex trickery to cancel out the negative magnetic effects between the mechanical and electronic modules, and the watch completely hides the technology within.

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Smart features include step tracking, sleep tracking and a second time zone. So pretty par for the course for a modern hybrid, but the Hybrid Manufacture goes with its coaching. In the app you’ll see health tips based on your stats, advising you, for example that too much activity in the evening is having a negative impact on your sleep. We plan to keep expanding on giving meaningful health information. That’s where we see the true value a smartwatch, measuring health indications on the body.

Another interesting part of the Hybrid Manufacture is for the real watch enthusiasts, as in the app  you’ll be able to see the health of the caliber itself. You’ll see a measurement of the amplitude (the rotation of the balance wheel), the rate of seconds per day it’s off, and the beat error.

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Collaboration with Citizen

In the summer of 2015, we were approached by two strategic watch groups to be acquired. Eventually, a third group joined the party. After careful consideration, for a long time, evaluating many aspects, we chose Citizen to be our parent. Below answers from a recent Q&A.

How did the acquisition play out?

The Citizen group lets myself and the management team carry out our initial plans for five years. Of course, the obvious change is that every month we, the Frederique Constant group, have to report to Citizen. In addition to that, we started working with Citizen North America on the distribution of Frederique Constant watches in the U.S. We used to have a subsidiary with 17 people in the U.S., but they have a distribution and organization infrastructure of more than 500 people. So, you can imagine the power that the two of us have, and that’s the reason why we’re together.

What’s the biggest lesson to learn from the Citizen Group?

For sure, the distribution. For example, we [Frederique Constant] switched to the Citizen group’s organization for Japan and the U.S. starting last summer. Also, in certain technologies like solar energy, especially for the connected watches. Citizen is really good at very thin movements. What they produced last year is quite incredible. Their quartz technology is fantastic. But, on the other hand, we brought to the table a lot of Swiss mechanical know-how. Yes, Citizen already has La Joux- Perret for Swiss movements, including for Arnold & Son, and we have already collaborated with them. The important point of this acquisition, however, is that the group has a multi-brand strategy, so every brand has a different price segment.

How’s the market’s response toward all of these changes?

We were quite concerned to see how the market would react. We have, from the beginning, clearly explained why we did it: Our two children, one is in Standford [University] in the U.S. and the other one who wants to go into the medical field, clearly told us they don’t want to go into the watch business. Then, when you’re approached to be acquired—we’re approached by two groups, later even another group also came along— if we say we want to keep it in the family, what’ll happen with the company?
Also, the company has already gone big with Hong Kong, German, Dutch, French subsidiaries and a Swiss company. You can’t simply hand over this company to someone who’s new anymore. It’s too dangerous. So, Citizen came, and they said that we want to have you do what you have done for five years. Other groups wanted to be hands-on from the start. We felt very comfortable, and then we decided to go with them. Frankly speaking, I’m still very happy with the acquisition.

What about your market shares in Japan? How does Japan respond to mechanical watches considering Citizen is big on quartz timepieces?

No change. Now, we have the flyback chronograph. We’re working on a new caliber for next year, and we’ll continue, if possible, to come up with a new mechanical innovation every year or two—if it’s not too complicated.

How do you balance the creations of the traditional and the connected timepieces?

Yes. It already represents 10 percent of the business turnover after only two years’ time. We used to have 30 percent in quartz, but now it’s only 25 percent in quartz and 10 percent in connected watches. So, it has really eaten up some part of the quartz segment.

How is Ateliers deMonaco doing now?

It’s still very small. They work with very few retailers. In Singapore, there’s one point of sales. It’s a watch for someone who wants what nobody else has. So, it uses a one-on-one sales strategy for very expensive pieces, up to €200,000. And the brand is growing gradually. We work with a few retailers, but then it’s typically with these retailers that organize private dinners. It’s more personal. It’s also bespoke, as well. Like very special dials, combination of materials, special diamond colors and so on.

These days, there are more and more brands offering entry-level prices. How does this impact Frederique Constant’s bottom line?

We have seen all these changes from others, with so many adjustments. We have had the strategyof accessible luxury for over 20 years. All that time, we slowly grew. Last year, the growth halted a little, now we’re back on course again. I don’t see that such change affects us; we just continue what we do best. Everybody knows Frederique Constant is value for money. All the retailers know, and even the clients know about it. Meanwhile, other brands need to explain why last year they’re too expensive.

What is Frederique Constant doing to reach potential buyers from the younger generations? The millennials, if you will?

In the digital space, we do more and more to reach the younger people. We’ve had one million fans on Facebook and we clearly see that we reach mostly 20-somethings versus the older market. Product-wise, we have the entry-level watches and, of course, the connected watches. So, we definitely have products for younger customers. I’m not really so sure that we really have a lot of young customers, though. It’s something we should investigate. But typically, our customers are around 30 years old.
So, we’re not changing our DNA, to be “younger,” so to speak. We’re first and foremost a Swiss watchmaker for businessmen and businesswomen. That’s typically our first market. As a matter of fact, our strongest market shares are in Europe at 38 percent. Asia is about 26 percent. Everybody wants to go to China, but the market changes quite rapidly.

What are your Top-3 Priorities?

If you have more than three priorities, you don’t have any. Determining your top-3 priorities and how they’re going to be measured is arguably the most important job of a leader because most of the work that everybody does will flow from those goals. Those priorities have to be lined up as carefully for each quarter or you’re certainly going off-course over time. You want to succeed finishing your top-3 priority selection for each quarter.

And it may sound simple, but it is often one of the greatest challenges that teams and companies face. Typically leaders start listing five or seven or 11 priorities.

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The trick is to prioritise the ‘important’ and select what the top-3 actions are for the quarter. How you are going to measure progress along the way. Tomorrow, we will have our Annual Session with Patrick Thean. We will be deriving our plan for 2018 and top-priorities for Q1.

Once you have your top-3, you have to keep reminding your team of the priorities, even if it can feel repetitive. People often have to hear something a few times before they truly remember it. “You say something seven times and they haven’t heard you,” he said. “Until they start making jokes about how often you repeat it, they haven’t internalized it.”

Then, hold everyone on your team accountable for their work and role on the team. In effect, it’s a simple bargain that leaders can offer their employees: “I’ll treat you well, but we’re also going to be clear about the work you’re expected to contribute.”

You need a culture where we value the people who do what they say — they have a high ‘do-to-say ratio.  You just need people who follow through, and it’s a lot more fun when the people you work with do that. You can count on them and communication flows faster.

What Innovators Do

Successful innovators don’t delegate creative work. They do it themselves!

Innovators

The ability to innovate is key to business success. It all starts with research, or “discovery activities” as HBR calls it : associating, questioning, observing, experimenting, and networking. They claim that successful innovators spend more than 50% of their time on discovery activities during which they engage both sides of the brain. It is more than the cognitive skill of being right-brained. You need to leverage both right AND left side of the brain.

Associating

Associating is the ability to successfully connect seemingly unrelated questions, problems, or ideas from different fields. New ideas blossom at the intersections of diverse fields. Fresh inputs trigger new associations. As Steve Jobs has frequently observed, “Creativity is connecting things.” Associating is like a mental muscle that can grow stronger by using the other discovery skills. As innovators engage in those behaviors, they build their ability to generate ideas that can be recombined in new ways. The more frequently people attempt to understand, categorize, and store new knowledge, the more easily their brains will naturally and consistently make, store, and recombine associations.

Questioning

Innovators constantly ask questions that challenge common wisdom. “The important and difficult job is never to find the right answers, it is to find the right question”.

Ask “Why?” and “Why not?” and “What if?”

Innovative entrepreneurs are likely to challenge assumptions. Innovative entrepreneurs like to play devil’s advocate. “My learning process has always been about disagreeing with what I’m being told and taking the opposite position, and pushing others to really justify themselves,” Pierre Omidyar said. “I remember it was very frustrating for the other kids when I would do this.” Asking oneself, or others, to imagine a completely different alternative can lead to truly original insights.

Observing

Discovery-driven executives produce uncommon business ideas by scrutinizing common phenomena, particularly the behavior of potential customers. In observing others, they act like anthropologists and social scientists. “Often the surprises that lead to new business ideas come from watching other people work and live their normal lives”. Innovators carefully, intentionally, and consistently look out for small behavioral details—in the activities of customers, suppliers, and other companies—in order to gain insights about new ways of doing things.

Experimenting

Unlike observers, who intensely watch the world, experimenters construct interactive experiences and try to provoke unorthodox responses to see what insights emerge. Innovative entrepreneurs engaged in active experimentation, whether it is intellectual exploration, physical tinkering, or engagement in new surroundings. As executives of innovative enterprises, they make experimentation central to everything they do. One of the most powerful experiments innovators can engage in is living and working overseas. HBR research revealed that the more countries a person has lived in, the more likely he or she is to leverage that experience to deliver innovative products, processes, or businesses.

Networking

Devoting time and energy to finding and testing ideas through a network of diverse individuals gives innovators a radically different perspective. Unlike most executives—who network to access resources, to sell themselves or their companies, or to boost their careers—innovative entrepreneurs go out of their way to meet people with different kinds of ideas and perspectives to extend their own knowledge domains.

 

 

S/Y Alpina Win Maxi Cup

Not only passion for watches: Congratulations on the podium finish for Alpina in the Maxi Rolex Cup.  It has been great to see Alpina competing in this event, a perfect opportunity to show off the new improvements and reconfirm her excellent performance.

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S/Y Alpina performing well after recent refit

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S/Y Alpina Hull 007 at the Maxi Cup 2016

 

MMT Update

Tuesday September 6th, we had a press event to announce the completion of the spin-out of Manufacture Modules Technologies Sàrl. from the Frederique Constant Group. The MMT team moved to new offices and workshops in Skylab, one of Geneva’s main high-tech hubs.

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New offices and ateliers MMT

MMT is independent and has an Inclusive Philosophy. We realize that most watch brands are too small to invest individually in a comprehensive Technology Platform. However, when we work together with a number of brands, we have the critical mass to expand the current platform long-term. Brands can create unique products with modules and individual technology components.

 

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At the press event, we had 80 participants in Geneva and 30 on Live Stream

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Introduction by me

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New CEO MMT Philippe Fraboulet

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The company delivers its modules to various watch brands

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The app portfolio is in process to be expanded to five apps

Check out more information: http://www.mmt.ch