In the past few months I have been spending a lot of time visiting Geneva, and I can’t help noticing from the advertisements at the airport that time really is money in this pleasant part of Switzerland.
Although watches are very much old tech, there is still a lot of money tied up in the business. Those of you who, like me, are content with a cheap Casio may be interested to know that the good people of Geneva airport duty free will replace your humble £20 timepiece with a top-brand Swiss equivalent that will give you the same functionality for upwards of £2K to beyond £20K.
As I was waiting in the departure lounge for another delayed flight, I started thinking about the serious prices for watches and whether they were the last great confidence trick of a complacent industry shortly to be made obsolete by the boys and girls of Silicon Valley. After all some of my hipper, tech-loving friends are now sporting new smart watches that cost several hundred pounds.
My suspicion is that my tech-loving friends are an anomaly and that most people (me included) work a step behind. We are happy to keep abreast of technology developments, but we don’t buy into something until we can see the benefits, have considered the lifetime costs and have thought a bit about obsolescence. So for example, I bought an iPad nearly three years ago when the Version 1 shortcomings such as lack of camera had been dealt with. I bought with the expectation that my £400 purchase would be obsolete after four years. But that’s OK. In my head I reckoned on getting over £400 of value from train/plane/hotel room entertainment in that four-year period. Since I bought it, there really hasn’t been any feature or improvement in the interim that has made me abandon it earlier than planned and I expect that in a year’s time I will go out and buy a new one.
New smart technologies like wearables are more akin to tablet devices and desktop computer than they are to mobile phones. After the version 1 hype there is a brisk period of version 2 adoption where most people make their value and obsolescence calculations and purchase accordingly. Sales then peak, followed by a retreat to lower ongoing sales when the technology is renewed only when it becomes genuinely obsolete. Sales of tablet devices have peaked like desktops before them and fitness bracelets surely will in the future. It is hard to justify spending £400 every year to replace a nice-to-have but non-essential device for one that is 50g lighter but pretty much does the same thing as the one that was bought two years ago.
So where does that leave the Swiss watch industry? Their near-death skirmish with Japanese digital watches in the early 80s taught Swiss watchmakers something that Silicon Valley has yet to learn. They know that you can charge big money for non-essential technology that won’t change your life, but that once something goes over a few hundred pounds the customer needs to understand the long-term value of their purchase. The marketing of Swiss watches makes a big thing about enduring value and lack of obsolescence; if I were to spend a few thousand pounds on a “Whatevererex” timepiece I would want a pretty good idea that it would still work in 20 years and that it would retain most of its value even after inflation. On the other hand I am prepared to wager that a £800 Apple smart watch will not even work in 10 years time and will be worth precisely nothing.
Maybe it is Silicon Valley that needs to go Geneva and not the other way around.