Both watch buyers and watchmakers have been a bit confused by the market over the past few years. The emergence of so-called “smart” watches has made the market a bit unpredictable.
Smartwatches are wristwatches that can interface with a smartphone, allowing the wearer to track fitness statistics, control music on their phone and receive alerts when they receive email or text messages. Smartwatches, led by the Apple Watch, have sold well, and have in recent years put a sizable dent in the sales of Swiss designer watches, which have led the market for decades.
While sales of traditional Swiss watches have slowed in the past few years, they have recently started to climb again, much to the relief of Swiss watchmakers. Many have been in business long enough to recall the early 1970s, when the then-new quartz watches took over the market and threatened to put makers of traditional luxury watches out of business altogether.
That eventually passed. Some companies went out of business. Others adapted to produce a mixture of mechanical and electronic watches. Luxury makers mostly doubled down on the luxury, producing better, more expensive, and more elaborate timepieces that appealed to well-heeled buyers.
That appears to be what is happening now, as people are starting to realize that Swiss watches have things to offer that smartwatches, at least for now, do not. Mechanical watches, particularly high end ones, offer examples of fine craftsmanship. They are accurate timepieces, and with care, they can run well and last for decades.
That is not the case with smartwatches, as it wasn’t the case with quartz watches of the early 1970s. While there is a bit of a collector market for early quartz watches, working examples of early models are quite hard to find, as they simply weren’t built to last for decades. In comparison, Swiss watches from the same era have done far better in terms of appreciation over the years. There are few quartz watches that sell for a lot of money, though the now-rare Seiko Astron 35SQ, the world’s first commercially produced quartz watch, does sell for $6000 or so when it turns up for sale. While that seems like a lot of money, it’s about what the watch sold for new when inflation is taken into account.
Most buyers, however, would rather own a vintage Rolex or Patek Philippe from the same era, and those watches sell for far more now than they did when they were new.
Over time, many current smartwatches are going to end up in landfills. They’re going to be replaced by newer models with more features, but they still will not likely be capable of working for years to come. That’s the difference between electronic watches and mechanical ones, and buyers who respect the difference are now returning to buy the Swiss designer watches that they’d previously been buying for many years.
It will take years for all of this to sort itself out. Many buyers of smartwatches are people who ordinarily wouldn’t wear a wristwatch, so they haven’t been affecting the mechanical market much at all. Other buyers are simply novelty seekers, and a few are likely hardcore watch collectors who are interested in both mechanical watches and new electronic gadgets.
In time, the Swiss watch industry will make a rebound, and it looks like that is already happening. According to Rapaport, Swiss watch exports were up 5% in June and that continues a trend that started earlier this year.
Still, if you’re sitting on a first generation Apple Watch, it probably would be wise to put it back in the box and save it for a few years. Eventually, it will sell for a lot as a collectible…provided that it still works.