Swatch Plans Smartwatch to Compete With Apple Watch’s Debut

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Swatch Group AG plans to start selling a smartwatch within the next three months, potentially pitting the Swiss maker of colorful plastic timepieces against the debut of the Apple Watch.

The device will communicate via a form of technology known as NFC and won’t have to be charged, Chief Executive Officer Nick Hayek said in an interview. The Swatch smartwatch will also let consumers make mobile payments and work with Windows and Android software, he said.

Hayek is ready to go head-to-head with Apple Inc., which has scheduled its smartwatch introduction for April. The market for such timepieces, which enable phone or data communication, will probably reach about $10 billion in 2018, Citigroup Inc. analysts forecast last year, with half of the market coming from traditional watch wearers switching to the devices.

Swatch has decades of experience developing technology that might go into a smartwatch, such as long-lasting batteries so thin they’re bendable. The company’s Tissot brand has made watches with touch-screens since 1999 that now offer an altimeter, a compass, and sensors to record a diver’s descent.

Skeptic’s U-turn

Hayek has been skeptical about the smartwatch’s potential. Two years ago, he said that he didn’t think the smartwatch would be a “revolution” for the industry. He has repeatedly voiced concern that watch screens are too small for communicating and that such devices might need too much charging. Last year, he said Swatch won’t participate in a race to be first in developing the products because of consumer resistance. He once said Swatch’s luxury brands such as Blancpain are smartwatches because “they make you look smart.”

“Entrepreneurs are practical people, and they care more about being successful than being consistent,” said Luca Solca, an analyst at Exane BNP Paribas. “Hayek has always said they have relevant technology for a smartwatch -- sensors, display, battery -- and seems to be set to make the most if it. Better to have an option and a hand in this category than not to. Nobody can yet say how relevant smartwatches will be in the end.”

Patent Destiny

The Biel, Switzerland-based Swatch said its patent applications reached a record in 2014, adding it will be reflected in “numerous innovative project launches in all segments” this year. Such patents include batteries based on new materials that can double their performance, Hayek said.

“We’ll implement all of those into new products,” Hayek said. “Some of them, such as the battery, will take a few years though, and are also destined for other industries, like the automotive industry.”

The Apple Watch will feature health-tracking features and other applications for maps, photos, and messages. Apple CEO Tim Cook also rolled out a mobile-payment system last year. The Cupertino, California-based company hasn’t given information about the battery life of its smartwatch, which needs to be charged with a magnetic connector.

LVMH, Richemont

A few high-end Swiss watch brands, owned by luxury-goods makers LVMH Moet Hennessy Louis Vuitton SA and Richemont, have been dipping a toe into the market. LVMH’s TAG Heuer plans to release a smartwatch this year, featuring GPS functions and health monitoring. Richemont’s Montblanc has unveiled an “e-Strap,” an interchangeable watch band that can track the wearer’s activities and can help find the user’s mobile phone via Bluetooth technology.

Swatch is in talks with retailers on its payment system, Hayek said, without naming them. The device will enter the market in two to three months, he said.

The stock closed 2.9 percent higher in Zurich today, erasing a decline of as much as 7.4 percent after Swatch reported full-year earnings that trailed analysts’ estimates.

(An earlier version of this story was corrected to fix the device’s method of communication and an erroneous reference to agreements with Coop and Migros)

(Updates with closing stock price in last paragraph.)
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