What a decade. When the AFR launched Watch in August 2007, Apple's iPhone had been released just four weeks earlier. That same year the Kindle launched, the hashtag debuted on Twitter and … Swiss watch exports were growing at their fastest rate for almost two decades.
The value of watch exports peaked at just over 22 billion Swiss francs in 2014 before dropping to 19.4 billion francs last year – a level last seen five years ago and one that still applies today.
If 10 years back we sensed an increase in watch interest in Australia, it was China that was emerging as the epicentre of accelerating demand. Despite ranking only just inside the top 10 markets in 2007, it was registering annual growth of 43 per cent in watch sales. Australia, accounting for less than 1 per cent of Swiss output, was seen as a market of the future.
Today, after successive years of China-led euphoria that saw it triple its watch imports and rise to the number three destination for Swiss savoir faire behind Hong Kong and the United States, things have stalled somewhat.
An unexpected dip
In Australia we still account for 1 per cent of the total, importing about 200,000 Swiss watches a year, but after defying the downward trend until this year we're now looking at a fall-off in units of almost 13 per cent, translating to an almost 10 per cent decline in the value of watch imports.
The Swiss, of course, aren't the only folk producing watches – China, Germany, France and Japan have their watch operations, but it's the Swiss who dominate in terms of value and luxury brands, and their export figures have traditionally been seen as the indicator of the industry's health.
The dip, here and abroad, is one that's caught the industry off guard, and again the blame has largely been sheeted home to changed circumstances in the land of the dragon. China was seen as the new horological promised land, one where countless numbers of young millionaires were anxious to show off their wealth, and where better to do it than on their forearms.
When a gift isn't a gift
As demand took off, brand executives pored over plans for massive expansion projects of the kind deemed necessary to keep up with an insatiable thirst for their wares. Then came the Chinese government's clampdown on corruption and conspicuous consumption.
If you're wondering what that has to do with it, a visiting executive from no less a revered maker than A. Lange & Söhne suggested some time back to Watch that up to 70 per cent of high-end watch sales in China were "gifts" for officials.
Given watch brands' investment in plant, not to mention distribution and retail in the promised land itself, it was no wonder research last year showed feelings of insecurity and pessimism in the industry were running at levels not seen since the quartz crisis of the 1970s.
A poison apple
They would hardly have been cheered by another event that came just as things were slowing in 2015. Weeks after the giant watch fairs, Apple announced it was launching a competitor to the time-honoured wrist machine, in reality an electronic device but one it had the temerity to call a watch.
Smart watches have been around in one form or another for years. The first Bluetooth model, an admittedly clunky Sony Ericsson device, appeared a decade back; Samsung Galaxy and Android models much more recently.
None do quite what the Apple does: none are as accurate, none have enjoyed such widespread publicity and none – look around you – have had the take-up. While purists pooh-poohed and doubters debated its right to wrist space, Apple simply retailed with panache, stole a march on offering colourful quick-change bands – and refused to release sales figures.
A confused response
The traditional watch-world split into opposing camps about how to react. IWC and Montblanc flirted with fiddly buckle-like gizmos, Frederique Constant incorporated a connected module into a classic-looking piece and Breitling configured something specifically for pilots. But initially only Tag Heuer took the plunge into the smart watch territory proper, launching its Android-based Connected watch.
If this was a response to the Apple, it's proved – apart from the attendant publicity – to be a relatively lonely and mild one. While Tag last year reported unit sales exceeding its initial target of 50,000 (and predicted a tripling to 150,000 this year), Apple was grabbing a reported 60 per cent of smart watch sales, some 5 million devices in the final quarter of 2016 alone. That's a lot of wrist real-estate no longer available to a trusty ticker.
Rubbing salt into the wound, Apple's chief executive Tim Cook cheekily proclaimed his brand was second only to Rolex in worldwide watch sales. (Rolex doesn't release its figures but sales are estimated to be about $US4.5 billion [$6 billion] a year.) No wonder the Deloitte Swiss Watch Industry Study 2016 found that 82 per cent of watch executives were pessimistic about the future.
Apple mightn't match the prestige of Rolex, but what a wake-up call, especially with unit sales of traditional Swiss and smart watches running almost neck and neck last year, attracting some 20 million-plus customers each. This is not to forget that other powerhouse, Japan, home to Seiko, Citizen and Casio, although there the trend has been down too, with output 10 per cent less than last year. And while the country produced by far the most watches, 67.7 million of them in 2016, three times the Swiss output, their value was just ¥260 billion ($3 billion), about a 10th of Switzerland's export figure.
So how to revive things if you're a watch brand? The usual answer is "product" and the Geneva and Baselworld fairs that take place in January and March provide an annual stage for the brands to show new wares, and reveal their responses.
The results this year, while impressive, were unusually mixed. In place of obvious trends – everyone doing blue dials, perpetual calendars, larger-than-ever wrist-pucks, for example – an air of uncertainty pervaded Geneva's Salon International de la Haute Horlogerie, each famous name exhibiting there doing more or less its usual thing.
Vacheron Constantin produced another most complicated wrist-watch yet seen, Cartier slimmed down its Drive model and brought back the Panthère in a thousand guises, Audemars Piguet managed more tweaks to the Royal Oak, and A. Lange & Söhne and Greubel Forsey revealed the usual impressive complications. It was left to Panerai to surprise, which it did with a timepiece that requires no servicing for half a century. Just what we've been clamouring for. Oh, and IWC, which, having discovered women buy watches, produced a pretty Da Vinci line-up. Also unexpected was our cover watch, Jaeger-LeCoultre's retro/modern Master Control, which seemed perfectly pitched for current times with its reasonable – for JLC – price.
Back to the future
Baselworld, despite taking place just nine weeks later, seemed to have settled into a more unified understanding of the state of play and what was required to address it. While Rolex and Patek stuck to their revered recipes, as did Omega with more incarnations of the Moonwatch, it was the flight – almost en masse – of brands to the safety of the past that defined this event, Tag Heuer, for example, reprising the Autavia, a watch first seen 55 years ago.
It's already proved to be desperately popular, but even so it seems fair to ask if the past is the way forward? Is the biggest potential market, really, blokes who couldn't get a particular watch the first time around? Or is it just that no one could think of another solution other than more of the same or more of the past? The answer is yet to reveal itself.
Check out the gallery above to see how big brands have responded to today's complicated times.
This story was first published on AFR Magazine's 10th Anniversary Issue of Watch.