The week of September 14, 2014

Tradition, timepieces, and the scourge of the smartwatch

By Micah Singleton

The chaos of the shops in Manhattan’s Diamond District is something to behold.

From historic luxury brands like Patek Philippe, Audemars Piguet, Cartier, and Rolex, to family-owned shops like Masters of Time and Sullivan & Sons, just about any watch can be had and any issue repaired. Walk into an emporium on 47th Street and a salesman will quickly offer to find you “the best watch money can buy.” They will relentlessly attempt to sell you on everything about it, from the dial to the band, telling you how it will become a family heirloom for your children.

When it’s your job to sell someone a watch—the main function of which has been rendered unnecessary by technology—being persuasive is a prerequisite.

Any watchmaker or watch dealer will tell you that a watch is much more than a timepiece; it can be a fashion statement or the mark of an accomplishment, a signifier of taste, or worn in remembrance of a loved one. Getting that same watch dealer to merely discuss the existence of smartwatches is where you run into trouble.

There’s a very real fear within the traditional market that theirs will slow or dissolve with the incoming onslaught of smartwatches. At the same time, many shop owners I spoke with in New York didn’t want to speak out on the record against these new devices, though a rather infamous one sarcastically said, “I only work with dumb watches.”

The watch industry took a hit when cellphones became commonplace in the early 2000s, and many of the people who experienced that downturn are still around, fearing the next decline will come at the hands of the latest form of technology.

Even with the media hoopla surrounding the new Apple Watch, that fear may be misplaced, at least in the short run. Over 1.2 billion wristwatches were sold in 2013, exceeding the 967 million smartphones that were sold in the same time period. Even as smartphones have replaced the need for a watch, sales have increased over 3 percent in the last year.

While many in the traditional watch industry are apprehensive about smartwatches, there are some who see their merits, and others who believe that everyone won’t want an information hub on their wrist in addition to the one in their pocket.

Martenero is an independent watchmaking company that isn’t afraid of what the future holds. Founded by John Tarantino and Matthew O’Dowd, CEO and creative director, respectively—two Americans who had a chance meeting in Madrid, Spain—Martenero is blending technology with classic watchmaking to provide a unique experience for those who purchase a watch from the New York-based company.

On Martenero’s website, you can customize the dial, hand, and strap of the watch you choose (they offer two distinct, automatic watches, with more to come), giving the company an advantage over competitors who choose uniformity and production speeds over personalization—a trait deeply valued by the current generation of consumers. The company, which launched earlier this year, has gotten off to a strong start with sales of its watches and has been well-received by the watch community.

“We think [smartwatches] are cool, and clearly a big deal. It’s a promising platform with a ton of potential, and we’re excited to see how they evolve in the coming years,” O’Dowd told The Kernel.

“Because its something consumers are expected to wear, a smartwatch has to double as a fashion item. Most of the early models have a futuristic techie look that’s not going to work with a lot of people’s style. We’d like to see more classic design influence.”

The founders believe that a round design is key to success for smartwatches. The current stable of square watch faces won’t intrigue the public-at-large.

“In my experience people tend to prefer circular watches, and so smartwatch producers should, at a minimum, experiment with circular designs,” Tarantino said. “There are certainly exceptions, Cartier’s square watches come to mind, but circular watches seem to have more universal appeal.”

“People much prefer round watch cases, but because of screens, smartwatches tend to be square,” O’Dowd continued. “The Withings Activité is an exception with some really nice classic elements, although it’s not a true smartwatch.”

Even as smartphones have replaced the need for a watch, sales have increased over 3 percent in the last year.

O’Dowd and Tarantino believe that while some sections of the traditional watch industry may take a hit with the expected proliferation of smartwatches over the next few years, the depths to which the industry will struggle largely depends on how productive smartwatches actually are for their users.

“‘Wrist real estate’ is now something to think about,” O’Dowd explained. “If you can only wear one, which are you going to pick? It depends how useful smartwatches become. My smartphone is so vital that I won’t leave my apartment without it.

“The current vision for smartwatches is they’re supplemental control surfaces for your phone with personal fitness monitoring. While this is interesting, is it indispensable enough to make me ditch my watch collection? Siri was the futuristic killer feature for the iPhone 4S, but how often do you see people using it?”

While new entrants have come and ended the run of longtime staples in a number of industries, O’Dowd and Tarantino do not believe the traditional watch market will suffer the same fate, at least not anytime soon.

“We’ve seen many examples of a new technology making an older one disappear almost overnight. Computers replacing typewriters. Cars replacing horses. Steel replacing bronze. For utilitarian objects this is almost always the case,” O’Dowd said.

“But for objects appreciated for other reasons—aesthetics, tradition, artistry, style—the classics tend to endure. Like the appeal of wood and leather over plastic and nylon. Lasik and contacts have yet to take down glasses. Velcro is superior to shoelaces in almost every way, but most people over the age of five still lace up.”

He doesn’t think everything is safe, though. “Certain watch categories are going to be more vulnerable. Lower end quartz watches and casual fashion pieces are likely to take a bigger hit. But people who enjoy mechanical watches and classic timepieces have a different kind of appreciation that is likely to endure.”

How do you market against smartwatches as a traditional watchmaker? According to O’Dowd and Tarantino, you can’t.

“From the standpoint of functionality, there is no comparison,” O’Dowd stated. “But a mechanical watch isn’t a tool. It’s a work of art. While a watch does tell time and is useful for doing so, that is not its primary purpose. Just like the primary purpose of a fine tailored suit is not keeping you warm, the primary purpose of a Ferrari isn’t getting you from point A to point B, and the primary purpose of a $50 million penthouse is not shelter from the elements.

“Your phone tells time. Your laptop tells time. Your $10 Casio tells time very accurately. Even your microwave tells time better than the finest Swiss mechanical watches in existence. And now smartwatches are here with all their functionality. Traditional watches should have been killed by a number of threats. The ‘quartz crisis’ in the 70s, when cheap and accurate battery powered watches began to flood the market. Or when digital LCDs threatened analogue displays. Your Nokia with a clock. Your smartphone.

O’Dowd paused the kicker. “In spite of all this, mechanical watch sales have been growing every year.”

Leo Padron is a self-taught watchmaker. Born in Venezuela and raised in New Jersey, he’s a natural builder and tinkerer. Padron can be described as a bicycle mechanic and robotics designer—his passions as a teenager—or as a user-interface designer for websites, as was his profession for 15 years before he became a watchmaker.

Unlike watchmakers who go to school for years to learn the trade, Padron used the Internet to learn how to make and repair watches. He began by fixing vintage watches, the first being his grandfather’s watch, the initial piece that got him interested in the craft.

Four years ago, Padron started the Minneapolis-based Padron Watch Company and has found success rarely experienced by upstart watchmakers. In 2012, he decided to use Kickstarter to fund his first watch. The watch was funded at 490 percent of the requested amount. Padron subsequently put two successive watch projects up on the crowdfunding platform, which were funded at 222 percent and 422 percent respectively, raising over $270,000 from the public for three watch projects in as many years. Today, Padron has crafted and sold nearly every watch in his inventory.

Given his history working with technology and his success with Padron Watch Company, Padron has a truly unique perspective when it comes to the design of smartwatches—and the potential consequences of smartwatches on the traditional watch industry.

“Wrist real estate’ is now something to think about.”—Matthew O’Dowd

“The problem I see right now is a serious lack of imagination around what a smartwatch is supposed to be,” he said. “Most envision it as something deeply dependent upon your mobile device, and let’s not forget many of the players right now are steeped in mobile. There’s this bad habit in the industry of assuming a smartwatch should behave like a thin client device for your smartphone, versus a thing in its own right.

“The problem remains that at the end of the day, if all a smartwatch is supposed to be is a notification device for your wrist. Unfortunately that’s actually really annoying. Especially when you consider marketers will try to find clever ways to use your wrist as a shiny new advertising platform.”.

Padron believes that smartwatches and traditional watches can coexist but does note that traditional watches have a distinct advantage over smartwatches and most electronic devices. Smartwatches seem great right now, Padron intimated, but it doesn’t mean the circuit-filled devices will come close to the lifespan of a traditional watch.

“Anything that gets people thinking about watches is good for everybody who makes them,” Padron said. “Many of the people who buy a Padron watch also own a smartwatch. And a Casio G shock. Even perhaps a nice vintage Omega. People treat smartwatch vs. watch watch like it’s a zero sum game. One lives, one dies. People have the ability to like more than one thing at the same time.

“Electronics go rancid over time, capacitors especially being the first things to fail in any circuit,” Padron continued. “You might be able to still turn on your smartwatch in five to 10 years, but without your current mobile content ecosystem somehow preserved, you’ll soon find it pretty limited. In 20 to 25 years, it probably won’t turn on at all, because the electronics have degraded. In the meantime, your mechanical watch will still be ticking. At your son’s wedding, at his children’s wedding, and his children’s children’s wedding. For some people, this is more important than getting a wrist tweet, and it is what powers the mystique of a good watch.”

Part of the reason newer, independent watchmakers like Martenero and Padron Watch Company can set up shop in the U.S. is thanks to the efforts of watchmakers like Kobold. In its 17th year of business, Kobold Watches has found success making high-end watches that can withstand the dangers of climbing Mount Everest, while still maintaining an elegant design and competing with popular brands like Tag Heuer and Omega.

Kobold Watches is credited in large part with bringing watchmaking back to American soil, and maintaining its credibility has come at no small cost. In 2006, Kobold’s Spirit of America line became the first large-series watch to be produced stateside in 39 years. Kobold Watches invested over $250,000 just to make the watch case in the U.S.

With no watch under $1,000 and the top-of-the-line Soarway coming in at $14,500, this is not a brand you find in department stores. The $1,100 NEC 5326 will only be sold to Navy SEALS who have passed Basic Underwater Demolition training or (BUD/S)—and the company will check to make sure you’re not bluffing.

All of that achievement comes with confidence: CEO Michael Kobold isn’t worried about tech companies challenging traditional watchmakers, specifically those on the more expensive end of the market.

“Absolutely not. Not in our field. Maybe at the very low end, $50-$100 mechanical watches out of China, if that’s what you want to call traditional, but as far as the higher end stuff, in the league that we play, everything around $1,000 and up, smartwatches will certainly not hurt our segment,” Kobold said. “And anybody who thinks so are the same people who thought the Internet was bad for business, and we’ve proved that the opposite was true.”

“The problem I see right now is a serious lack of imagination around what a smartwatch is supposed to be.” —Leo Padron

This isn’t just bravado. Kobold realizes that younger generations aren’t wearing watches as they used to, but he notes that the Swiss watch market hasn’t been affected negatively in the least by the lack of watch-wearers in the younger generations.

“For the last decade or so, younger generations have not been wearing watches. In fact, if you look around, anybody under 30, a lot of those people do not wear watches,” Kobold said.

“When do they start wearing watches? When they make their first million, or when they made a lot of money, and they can afford a good watch. They mark that occasion with a good watch. That has meant that the lower end of watchmaking has suffered, your watches $100 and below, but the upper segment of the market, around $1,000 and above hasn’t been hurt by it at all. The numbers speak for themselves. The Swiss watch industry has been going gangbusters, year after year.”

Even though smartwatches may pique the interest of a younger generation, Kobold believes that his segment of the industry is out of the reach of tech companies and their smartwatches, including Apple.

“[Apple is] not even a challenge, and I love Apple products, and I think the smartwatch they’re going to bring out is going to be wonderful, and I’m sure I’ll have one. I don’t think it will have any impact on the upper echelon of watchmaking, on the traditional end of watchmaking, none whatsoever.”

Martenero’s founders are keenly aware of their position in the market, and where they can take their company. Even with watches that appeal to a wider audience than the average watchmaker, they understand that being niche isn’t a bad thing.

“People who wear automatic watches are kind of like people who love vinyl records,” O’Dowd reasoned. “Digital music clearly has enormous advantages, but records have a sound and soul that appeals to people. But down the line, who knows? Maybe we’ll have a role in bringing the two worlds together.”

To that point, O’Dowd and Tarantino floated the idea of a hybrid watch—a traditional watch with digital components in the band. “Sort of like a jawbone or Fitbit capability within the strap while keeping the rest of the watch traditional,” Tarantino suggested.

A hybrid watch may quell a lot of the fears of traditional watchmakers, and force smartwatch makers like Samsung, Motorola, and Apple to step up their design quality.

If companies like Martenero have the capability to design the dial without restriction and get the technology put into the band, the fight for the wrist won’t be between traditional and smartwatches. It’ll be between technology companies and predominant watchmakers.

Photo via Martenero