This case examines the changing market landscape shaped by the new product category of smart watches, especially pertaining to the Swatch Group as a leading Swiss watchmaker and Apple as a legendary product innovator. An overview of the watch industry is also provided. The launch of the Apple Watch in September 2014 increased the general awareness of smartwatches, as well as of the entire landscape of wearable technology. Since then, the market has been redefined in terms of integrating both technology and fashion with the increasing importance of technology. The introduction of smartwatches and wearables into the “smart device” marketplace further complicates the already complex cosmos of ecosystems. At present, it is difficult for Apple users to switch to an Android or Windows phone, but it becomes even more difficult once a smartwatch is hooked to the ecosystem, containing proprietary apps, contacts, calendars and media. The Swatch Group., a leading Swiss watchmaker, has a portfolio of 18 watch brands across all price segments. In 2015, net sales decreased by 3% to CHF 8,451 million, and net income dropped by 21% to CHF 1,119 million. In February 2015, the Swatch Group introduced its first smartwatch “Swatch Touch Zero One,” designed for beach volleyball players. This followed the unsuccessful launch a decade earlier of the “Paparazzi” watch in partnership with Microsoft. With Apple having captured two-thirds of the global smartwatch market in 2015, it could become a strong competitor of Swatch, not least because Apple has a strong track record in disrupting industries. The question is whether and to what extent this will be the case and how Swatch Group should react. In fact, Apple might help the overall watch market to grow, and if so, the Swatch Group would undoubtedly like to share in this growth.
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