Time’s running out:: Business Line

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The watch business is under threat, not from other watch makers, but from the computing industry.

Switzerland is one of the wealthiest countries in the world in GDP per capita terms. The country has become a symbol of luxury, being home to many fine things in the world — be it chocolates, cheese, ski resorts or wristwatches. In terms of value, Switzerland is responsible for half the world’s production of watches. But its standing in the watch business may be under threat — not from any other cheap watch makers, but from the computing industry.

The story is no different for India’s very own brand ‘Titan’, which has become synonymous with wristwatches. A big threat facing the company is whether people would continue to wear wrist watches a decade down the line.

It is this existential question that has led the company to diversify from its core business of wristwatches into new areas such as jewellery, eyewear, bags and fashion accessories (under Fastrack) and, most recently, perfumes — all in the hope of hedging its business model.

In fact, today, wristwatches contribute to less than 20 per cent of the company’s overall sales compared with over 50 per cent 10 years back, although the company continues to sell more wristwatches in value terms. The table shows how the revenue share of Titan’s business segments has evolved over the years.

WHITHER WRISTWATCHES?

If you think about it, most people carry mobile phones, which are well equipped to display time, but this does not seem to have dented the watch market.

Rather, the reverse has happened. Watches have started being perceived on a par with jewellery, with people owning multiple pieces to suit each occasion. The sports watch category too has moved beyond its utility to showcase a sense of ‘cool’.

A key factor that has worked in favour of wristwatches so far has been their ‘wearability’ (for lack of a better word) which other substitute electronic gadgets have been unable to match. But this may no longer hold true with the advent of wearable computers.

BACK TO THE FUTURE

Going back in time, the analog phone industry was replaced by digital phones, followed by mobile phones and, recently, smartphones and phablets (phone + tablet) which have turned phones into handheld computers. Parallely, there has been a convergence of portable audio (walkman) and video (camera) into the handheld computer/ mobile phone.

The next stage in the computing revolution promises to take this convergence that rests in our pocket today and make it hands-free/wearable. Two recent launches of wearable devices are the Google Glass and Samsung Smartwatch.

MOVING AHEAD

Other than checking the time, Samsung’s Smartwatch doubles as a fully packed electronic accessory that allows you to answer calls, check email and messages, click photos, store/transfer data plus use a whole bunch of interesting apps such as a fitness tracker, location finder, and so on. According to rumour mills, soon, similar Smartwatches are expected to come out from other electronics and technology companies such as LG, Apple, Microsoft and Google as well.

It is tough to predict the direction in which technology moves, but when it does, things can change rapidly and the impact can be far-reaching. When some of the world’s largest electronics and computing giants want to get into the wristwatch business, it means traditional watchmakers have some serious pondering to do.