Handsets & The Swatch Effect

28 Sep 2005

Last year I’ve done a rather thorough paper on the history and marketing actions of Swatch. As the Swiss market became under fire of the Asian competitors, a lot of craftsmen decided to throw in the towel, and a lot of brands came up for sale. Swatch was one of the more clever companies that merged quite a bit of those brands into a holding, and by doing so they helped overcome this crisis. The watch market, however, is one of great competition and the one thing Swatch did that totally made the difference was creating a segment around their product.

In the mid 70s, the Swiss watch industry was in the midst of its worst ever crisis. Technologically speaking, the Japanese competition had been outclassed in 1979 with the launch of the ‘Delirium’, the world’s thinnest wristwatch with a limited number of components.

Its answer to the crisis was Swatch, a slim plastic watch with only 51 components that combined top quality with a highly affordable price. It first went on sale in 1983. Now, nearly 200 million units later, it is the most successful wristwatch of all time and SMH, the parent company, is the largest and most dynamic watch company in the world.

What does this have to do with mobile phones? Well apparently, according to an article in the BBC News : “As the developed world reaches mobile saturation levels, easy-to-use, cheap handsets will be crucial for vendors“, so says a new report from research firm Informa Telecoms and Media.

“Increasingly operators will offer own-brand handsets which could mean cheaper phones for consumers although it will also mean they are locked in to the services provided by their operator.

Mobile vendors will continue with their so-called ‘Swiss Army knife’ approach, loading phones with extras such as cameras, music players, Bluetooth and, increasingly, mobile TV.

Many operators are trialling mobile TV at the moment but there are still many issues to be ironed out, such as how deals will be struck between handset suppliers, operators, broadcasters and regulators.” [Read More]

So history repeats itself. The market is saturated in the developed world, and in the lower regions of this market, where consumers have less money, the battle is fought hard. This is the largest segment, with the highest number of possible subscribers/buyers. A battle worth fighting.

A very cheap, very low-priced alternative for the phone-deluxe, very soon in a town near you.

THE quote of the article that really hits the spot :

“If you have a device with a digital TV receiver and you have paid your license fee why can’t you receive television for free?” asked Mr McQueen.

I’ve uploaded my paper about Swatch, it’s in Dutch. If you can use it, be my guest.

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Posted by Miel Van Opstal in Marketing, Mobile & VoIP, Thoughts


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