Case: Swatch

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 Nicolas HAYEK opening quote
in the Swatch case (from a 1993 interview)

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 Before watches (1)
• Sundial and water
clocks were used since
Antiquity, until the
end of the XIIIth
century
• Hourglass was used to
measure duration
• Mechanical clocks
appear between 1270
and 1330
• 1336 in Milan: first
church clock with
automatic bell
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 Before watches (2)
• Increase in the number of clocks in Europe until 1400

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 The first watches (1)
• Early XVIth century, in Germany and Italy

• In 1571 a wristwatch (or arm watch) is offered to

Elisabeth Ist

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 The first watches (2)
• Technological
innovation in 1675 :
Christiaan Huygens
(Dutch) introduces the
watch balance wheel
• The first watch is
manufactured by French
watchmaker Thuret
• It was presented to the
Royal Society in January
1675

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The story of the Swiss watch industry (1)

• The Swiss industry benefited from a

significant inflow of qualified worked in
horology and jewelry, coming from France:
⁻ After the Saint-Barthelémy in 1572
⁻ After the cancellation of the Edit de Nantes in 1598
⁻ A number of them settled in Geneva
⁻ The Calvinist religion did not allow jewels to display
religious episodes
⁻ Jewelers turned to clocks
⁻ Too many watchmakers in Geneva in 1610 : the city sets
up quotas
⁻ Watchmakers move to other places in Switzerland,
such as Neuchâtel or the Valley of Joux

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The story of the Swiss watch industry (2)

• Abraham-Louis Perrelet :
⁻ Born in Neuchatel 1729
⁻ About the beginning of 1777,
Perrelet invented a self-winding
mechanism for automatic
watches
⁻ It was designed to wind as the
owner walked
⁻ His invention is still used in
modern wristwatch,

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The story of the Swiss watch industry (3)

• Abraham-Louis Breguet :
⁻ Born in Neuchatel 1747 (but French)
⁻ Moves to Versailles when he is 15
⁻ switches his focus from maritime chronometers to
private French clients
⁻ Sends a clock to Marie-Antoinette after the death of
Louis XVI
⁻ Leaves Paris in 1793, and comes back in 1795
⁻ Shows his watches in international fairs in 1798 and
1819
⁻ Very successful
⁻ Dies rich in 1823

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The story of the Swiss watch industry (4)

• Other famous watchmakers:

⁻ 1839 : Polish Norbert de Patek and Czech François

Czapek are watchmakers in Geneva . Czapek leaves in
1844, and Adrien Philippe, inventor of the key-less
winding mechanism, joins in 1845 (Philippe received
the Gold Medal at the French Industrial Exposition, or
World's Fair, of 1844,). The firm is still known as Patek
Philippe

⁻ 1848 : Louis Brandt, a 23-year old watchmaker settles

Adrien Philippe in Chaux-de-Fonds. The firm creates a new mechanism
circa 1880 in 1894, named Omega. This is now the company
name. The company became famous in 1969 when Neil
Amstrong and Buzz Aldrin landed on the moon wearing
an Omega Speedmasters

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The story of the Swiss watch industry (5)
• Other famous watchmakers:

⁻ 1884 : Breitling SA was founded in Saint-Imier, Bernese

Jura by Léon Breitling to manufacture chronographs.
Breitling comes up in 1923 with the first watch
chronograph with a push button (above, right)

⁻ Around 1880: Girard-Perregaux and other Swiss watch

makers began supplying German naval officers with
wrist watches

⁻ 1905: Rolex is created in London by Hans Wilsdorf and

Alfred Davis (the initial company name is Wilsdorf-
First Breitling Davis). The company moves to Geneva in 1914 to avoid
Chronograph with taxes. It comes up with the first waterproof wristwatch
a push button "Oyster“ in 1926
1923

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The story of the Swiss watch industry (6)

• First crisis (1929):

⁻ the Swiss watch industry creates ASUAG : la Société

Générale de l’Industrie Horlogère Suisse (includes
Longines, Rado, ETA and Eterna for instance)

⁻ Romandy watchmakers create SSIH : Société Suisse de

l’Industrie Horlogère (includes Omega, Tissot, Rayville-
Blancpain for instance)

⁻ These two companies act as a monopoly ; they define

market segments, set up prices

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The story of the Swiss watch industry (7)

• Third crisis: the Quartz crisis

⁻ 1962: the CEH (Centre Electronique Horloger) starts to

work on a new technology, using quartz

⁻ Several Swiss companies (including ASUAG, Omega,

Tissot, Jeager-LeCoultre, Rolex) took part to the project

⁻ In 1967 they come up with a quartz movement

⁻ Seiko too in 1967 !

⁻ From 1973 onwards : cheap Japanese quartz watches

invade the market

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The official Swatch story

• Hayek steps in and save the Swiss watch

industry

⁻ In 1983 SSIH and ASUAG faced insolvency

⁻ Hayek is called as consultant

⁻ He sets up a plan to merge the two entities into one

(SMH for Société Suisse de Microélectronique et
d’Horlogerie) and grow again

⁻ He has the idea of the Swatch

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The real Swatch story (1)
• Three men work together in ETA (ASUAG)

⁻ Ernst Thomke
⁻ Elmar Mock
⁻ Jacques Müller

⁻ In 1979, while Mock and Müller have a training in

Germany, they think about “How to come up with a
low-cost/mass market watch”

⁻ As “hidden research”, Mock started to work on plastic

injection machines in 1976

⁻ At the beginning of 1980 he orders a SFr 500000 plastic

injection machine without asking the management

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The real Swatch story (2)
• The Schnapps-Idee

⁻ On March 27 1980, at 11am, the secretary of Ernst

Thomke asks Elmar Mock to come to his office at 1pm

⁻ Elmar Mock immediately goes in Jacques Müller office

and tells hims they have to create a “project” to justify
the purchase of the plastic injection machine…

⁻ They draw a simple plastic quartz watch, pink and blue:

that’s the Schnapps-Idee

⁻ When Müller and Mock enter Thomke’s office, this one

is very upset

⁻ After yelling for 30 minutes, he asks :”What did you

intend to do with this machine ?”

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The real Swatch story (3)
• The drawing of March 27th 1980

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 The real Swatch story (4)
• First steps of the Swatch

⁻ Once Müller and Mock have explained the concept for the
mass-market / low-cost watch, Thomke reaction is « I’ve been
waiting for that for more than one year ! »

⁻ Thomke has been thinking about the concept for a long time,
andhe understand the Schnapps-Idee is the way to move
forward

⁻ On Dec. 23rd 1981, the first 5 prototypes are working (but

they stop after 5 days…)

⁻ In Autumn 1982, they launch the Swatch on the US market,

with an inventory of 10000 units

⁻ The rest is history…

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