There is absolutely no difference in how a luxury watch and an inexpensive watch tells time, in fact, you may need to wind a luxury watch every 3 days to keep it powered. Despite this fact, do we aspire to own a Rolex or a battery-powered Timex? Our answer to this rhetorical question has roots in the grim events that unfolded back in the 1970s. A pandemic of sorts for the Swiss watch industry.

Unarguably, much has already been spoken, written, and assessed about this Pandemic that forced our world into hibernation. Like billions around the world, I too was scared and angry at the same time. It was not because I was caught by surprise or by my lack of preparedness for the uncertainty of such magnitude though. Reasons may have been different, but emotions felt were just like anyone of you. After a year of adapting, we all could call ourselves survivors.

        If you are still on your feet, it's no small feat. 

Pat yourself on the back, and hang in there. Don't give up, as chances are, this Pandemic may lead you to a beginning of a new chapter akin to the Swiss watch industry during the quartz crisis.

My gradual love affair for wristwatches began with fancy time-pieces and matured with Haute Horlogerie. Spending hours looking at catalogs for A. Lange & Söhne, Patek Philippe, Jaeger-LeCoultre, or Vacheron Constantin. Curiosity led me into the fascinating three-century-long journey of watchmaking that began in countries of Europe and, eventually settled in Switzerland. It was largely due to Switzerland's neutrality in both World Wars. Watchmakers and craftsmen from many countries fled war and found a haven in Switzerland. It gave the Swiss, a significant advantage because the art, craft, and innovations of watchmaking flourished uninterrupted making its watch industry Switzerland’s third-largest export industry. An admirable ‘Swiss Made’ monopoly.

During this journey, the industry did endure major shifts in cultural, economic, and devastating world events but the Swiss government always believed in the future prospect of this comparatively little industry. For example, after the Great Depression in the 1930s, a group of Swiss banks and the Swiss government had facilitated to keep the flourishing watch industry afloat by lending millions of francs.

With bright and diverse minds in one place, competing with each other for excellence led to numerous pathbreaking innovations for accurate timekeeping. The number of functions achieved with precision on a mechanical wristwatch powered by just a spring was nothing short of great engineering. Inventions like Chronograph, Moon phase, GMT, Perpetual calendar, Minute repeaters, tourbillion et cetera were revised and optimized making mechanical wristwatches utilitarian than just a piece of jewelry.

Patek Phillipe wore by Queen Victoria, Omega by Neil Armstrong, Rolex by Martin Luther King, or Zenith by Mahatma Gandhi, the Swiss watch industry was prospering until 1970.

The Japanese after their defeat in WWII were rebuilding their economy by spending on research and development of new technologies. After a decade of research, on Christmas of 1969, Seiko unveiled its first quartz watch (powered by a battery) named - Astron. Within a year, Seiko initiated mass production that offered 5x more accuracy with 1/5 of the price of a mechanical wristwatch. These numbers were impossible to beat for the Swiss mechanical watches since most of the luxury wristwatches were made by hand that resulted in the higher production time as well as high labor cost. By 1977 Seiko had become the world’s largest watch company in terms of revenues. Quartz technology with the mass production ability of the Japanese had wreaked havoc on the Swiss watch industry, its third-largest export industry at the time. By 1988, watch industry employment had sunk to 75% while the production declined below 50% as consumers globally favored the new yet cheaper technology. Many established and revered watch companies went out of business and, the future for even the Watch Holy Trinity looked grim.

The holy trinity of watch making consists of three of the top luxury Swiss watch manufacturers: Audemars Piguet, Vacheron Constantin, and Patek Philippe. These three have earned their venerable ranks through generations of impeccable watchmaking, exciting inventions, and flawless design.

“A formidable Japanese watchmaker, K. Hattori & Co., manufacturer of Seiko brand timepieces, has emerged as undisputed kingpin of the $6 billion world watch industry after more than a decade of marketing upheaval and corporate turmoil,” Business Week wrote.

It was just as bad if not worse than the current Pandemic situation for the once-flourishing Swiss watch industry, known as the ‘Quartz Crisis’ This time, Swiss banks and governments were extremely reluctant to bail out their beloved industry as they too believed that Quartz was the future and were of the opinion that the Swiss watch industry should embrace it too. Losses continued to mount as no one in the industry had a clear idea on how to stop the dramatic sales drop for over a decade.

How this crisis was averted is a fascinating two-part episode.

Part I (Typical)

After many deliberations, a series of rescue packages between 1981 and 1983 were commissioned. Swiss banks pumped more than 550 million francs into the industry along with facilitating consultation with Hayek, owner of Hayek Engineering in Zurich, Switzerland’s top consulting firm. The banks commissioned Hayek to come up with a plan to save the watch industry. Completed in 1983, Hayek’s radical solution was to merge Switzerland's two top groups (SSIH and ASUAG) into one company and separate the brands from the production units. All production would be concentrated in ETA SA. The brands, who previously produced their own movements, would focus on design, marketing and sales. The banks accepted the plan and hired Hayek to execute it. The result was the birth of a new company, called SMH. Today it is known as the ‘Swatch Group’ and, its star product to counter inexpensive Japanese quartz wristwatches was - the Swatch wristwatch, made of plastic and non-repairable intended as a disposable accessory priced at a mere $35. It was an overnight sensation. Swatch shocked the watch world. No one expected the Swiss to strike in the low end of the market where they previously could not compete due to their high labor costs. It marked the turning point in the quartz crisis for the Swiss. Within two years after the Swatch launch, production had rebounded to 60 million units. That year 80% of Swiss watch exports were quartz watches, 42% of them plastic. That was the Swatch effect!

Part II (Relentless, inspirational)

At the very beginning of the seventies, Audemars Piguet, just like many other Swiss watch manufacturers, was facing troubled financial conditions. In 1971 Audemars Piguet had already realized that, without a disruptive change, a financial collapse was inevitable. At the same time, it didn't want to abandon its rich horology to manufacture cheap quartz wristwatches. The management at Audemars Piguet decided to be relentless in pursuit of saving tradition but also brazening it out with the best of their craft, ever. Do or Die.

The task was awarded to the designer Gerald Genta who conceptualized and designed Royal Oak in just 24 hours. The wristwatch was nothing like anything before. The case wasn't circular nor the screws were hidden. It wasn't made of precious metal and, it had the largest dial at the time at 39mm. The crazy part, it was launched for a price of 3300 Swiss Francs, this never-seen-before steel timepiece was more expensive than a gold Patek Philippe dress watch and more than ten times the cost of a Rolex Submariner. The message was certainly bold: Haute Horlogerie could come up with prestigious timepieces without necessarily relying on precious metals. From this point forward, it was the design, the precision of the execution, and the quality of the movement that counted. But there was no immediate take-off for this line. The Royal Oak was the target of fierce initial criticism. Disruptive design, visible gasket & screws, integrated bracelet, exorbitant price tag: there was enough for many detractors to say that Audemars Piguet was going to be bankrupt in few months.

Gerald Genta later revealed the design was inspired by a traditional diver’s brass helmet hence, he wanted the name itself had to be nautical-related. Audemars Piguet chose Royal Oak which came from the name of a series of eight vessels (remember that the bezel is octagonal) of Britain's Royal Navy which in turn took their name from the ancient hollowed oak tree within which the King Charles II of England hid to escape the Roundheads - the supporters of the Parliament during the English Civil War -  following the Battle of Worcester in 1651.

This one decision alone is responsible for why redundant luxury wristwatches are still sought after to this date. The biggest misconception around the world to date is that luxury wristwatches are expensive because they are made with precious metals and stones. It is not entirely true, the cost does add up but only makes 20-30% max of the wristwatch's price.

The introduction of Quartz technology was hailed as the Quartz revolution worldwide and perceived as the end of outdated, redundant Swiss monopoly. But after half a century most of us aspire to own a Rolex, not a Seiko/Citizen/Casio/Timex.

And, if you own or aspire to own a Rolex - thank Audemars Piguet for taking that step in the face of extreme adversity which gave hope to other watch companies and showed the path of self-worth.

Exactly one year ago, my country went into complete lockdown. Many countries followed. It felt like an apocalypse, many of us lost jobs and struggled for basic necessities. But, we all fought back - there is still a long way to complete recovery and we all will bounce back. On the way, if the typical method doesn't work out, don't be afraid to try what Audemars Piguet did.

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