TAG Heuer Carrera Calibre 1887 41 Silver (CAR2111.FC6291)

WORLDTEMPUS - 3 June 2011

Some hide it, some show it, but it's a fact: many of the most famous brands have quartz timepieces in their collections. Even if the economics of this are understood in the low- to mid-range brands, it still seems like a paradox for the marques that do most of their business in five- and six-digit regions.
Curious is also the fact that some of these brands clearly put their quartz models on display while others practically hide them. One of the absolute institutions of our industry is a good example: Patek Philippe. This prestigious, multi-award-winning manufacture, a proud owner of some of the most technical patents in the watchmaking industry, still retains some quartz watches in its line.

When asked about this tricky position, first replies often sound like embarrassed justification, "We give the most attention to our automatic and manual movements, and clearly our male clients don't want to hear about quartz." However, the Twenty-4 model is Patek Philippe's most high-profile quartz timepiece - and it remains in the collection. It currently even makes for more than 20 percent of the brand's worldwide sales among new pieces. In absolutes, this represents 10,000 of the yearly production of 45,000 pieces. In fact, many of Patek Philippe's ladies' models are also available in a quartz version, and today almost 50 percent of these models are powered by a quartz movement, a full three references of seven: Twenty-4, Aquanaut Luce, and Gondolo Serata. The manufacture, always a little reluctant to talk about quartz, tends to continue listing at least these three references in the catalogue.
Unequal market shares
At Girard-Perregaux, this goes the other way but ends up in the same place. "Ladies appreciate the convenience of a watch that never stops and is always very accurate," says marketing director Xavier Markl. Still, the La Chaux-de-Fonds-based brand admits that only 5 percent of its sales by volume is attained with quartz pieces. In stark contrast, TAG Heuer hits 30 and even 40 percent in the U.S. market.
Obviously, the market approach is fundamentally different. Nevertheless, the two brands agree on common points. "Only a very limited number of people buy their watches exclusively for its movement. The daily use of the piece is also key. And on that specific question, quartz and mechanical watches are not competing, but complementing each other," Markl underscores. Marc Wälti, group brand manager at TAG Heuer, goes further: "As we have the same R&D people working both on quartz and mechanical movements, sometimes there are interesting cross-references - for example, our research on precision and magnetism on quartz movements is what led to the basis of our mechanical Pendulum."

Historical
With only 5 percent of its business done with quartz timepieces, Girard-Perregaux could easily drop them from the line to reach a higher level of brand positioning - focusing on having only mechanical manufacture movements, a status that every watchmaker attempts to attain.
Nevertheless, Markl wisely recalls that, "quartz is also a significant part of the history of watchmaking in which Girard-Perregaux played an important role." It was this company that created the standard frequency of 32,768 Hz for quartz watches in 1971 now used by the entire industry. Girard-Perregaux produced more than 20,000 units of the most famous of its quartz movements, the GP350. The company utilized 13,000 units for its own models and sold 7,000 to other brands - including Jaeger-LeCoultre.
TAG Heuer's position is similar: its "DNA" is also based upon R&D, and, whether we like it or not, quartz entered the history of watchmaking when the CEH produced its first quartz ebauches in 1967.
(Dis)connected markets?
For TAG Heuer's Wälti, quartz is the first step to getting consumers interested in mechanical timepieces. "Some customers get attached to the brand and its quality, and one day buy their first mechanical piece." While this is true for entry-level watches, it doesn't necessarily apply to luxury brands for one main reason: the price of a luxury quartz timepiece is equal to the price of a mid-range mechanical watch, ranging from 6,000 to 15,000 euros. In other words, if the prices are equal, it's not economic reasons that draw the consumer; it's a rational choice.

The two markets might go their separate ways in the near future: if, for entry level brands, quartz remains the basis of the whole business model, luxury brands can easily move on without it - particularly when we see brands like Girard-Perregaux generating more than 95 percent of its revenues with non-quartz timepieces. Still, generally speaking for the Swiss watch industry, quartz remains a key factor of success representing 90 percent of production by volume. Be that as it may, the remaining 10 percent - mechanical watches - count for 52 percent of revenues.
Quartz predictions
Analysts currently predict b growth in the female market segment for mechanical watches. At the moment, women remain the backbone of quartz sales in the luxury segment. The question that must now be asked is: how will luxury brands will react if women progressively leave a segment that counts for less than 5 percent of sales? Will the brands continue investing in quartz for clients that no longer exist?
Forty years after quartz's mighty rise to the top in 1970, it is no longer a significant factor in the luxury market. In an interesting twist of watch history, it is actually women who have kept it in place here - for the time being.

Captions
LaureatoQuartz_PR.jpg
The Laureato by Girard-Perregaux celebrates the 40th anniversary of Swiss quartz © Girard-Perregaux
THF1 Full Diamonds Bezel & ceramic bracelet .jpg
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Began the luxury quartz craze for women: the Patek Philippe Twenty-4 © Patek Philippe
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A Patek Philippe quartz movement © Patek Philippe