As Swiss watchmakers dismiss Apple Watch threat, Swiss National Bank increased its Apple holdings by
Over the first calendar quarter of 2015, the Swiss National Bank increased its holding of Apple stock by 60 percent to 8.90 million shares, according to a U.S. Securities and Exchange Commission filing.
The bank's Apple shares, currently worth over $1 billion U.S., were the largest accumulation in U.S. securities among its top three American investments, according to a report by Bloomberg.
SNB also increased its holdings of Exxon Mobile (by 48 percent) and Johnson & Johnson (by 44 percent), but no other large American firm attracted its bullish appetite quite like Apple, now the world's largest public company. Apple's flagship iPhone 6 is increasing the company's market share globally, and Apple Watch is currently so constrained that even buyers in the U.S. and other launch countries are cited minimum wait times of two to four weeks for online orders, with some models not being listed as available to ship before July.
The bank offered no comment to reporters on its accumulation of Apple shares, but its annual report notes that "Equities are managed according to a set of rules based on a strategic benchmark comprising a combination of equity indices in various markets and currencies."
The SNB is currently paying negative interest rates, while exchange rates for the Swiss Franc (CHF) have also fallen dramatically compared to the Euro, US Dollar, Yen and British Pound.
Apple's sales in Switzerland have been hurt by the falling value of the CHF, which tends to make the company's products more expensive and less profitable, a problem Apple has also been experiencing across the EU with the Euro and in Japan with the Yen, among other currencies weakening against the U.S. Dollar.
At the same time, extremely low (or even negative) interest rates have enabled Apple to borrow via bond offerings at exceptionally low rates, giving it access to cheap money it can flexibly use to pay dividends or buyback its own shares. The company's vast cash holdings, now at $170 billion globally, guarantee Apple's ability to repay the bonds enabling it to borrow so cheaply.
While the stronger U.S. Dollar should be helping Swiss watch makers to export their products to America at more favorable prices, Swatch co-inventor Elmar Mock predicted last month that Apple Watch would "put a lot of pressure on the traditional watch industry and jobs in Switzerland," noting that "anything in the price range of 500 francs to 1,000 francs ($500-$1,000) is really in danger."
Mock compared the coming impact of Apple Watch to the "quartz crisis" of the 1970s and 1980s. Swiss watchmakers had failed to anticipate the public demand for less-costly quartz watches, ceding large swaths of the watch market to Japanese firms and losing tens of thousands of jobs in the process.
"So far I see watchmakers in this country making the same mistakes as back then," Mock said. "We've seen a lot of arrogance in the Swiss watch industry in the past few years, calling the smartwatch a gadget and not taking it seriously."
Nearly 60,000 people are employed by the Swiss watch industry, and the horological industry is worth over $20 billion annually to the Swiss economy.
The bank's Apple shares, currently worth over $1 billion U.S., were the largest accumulation in U.S. securities among its top three American investments, according to a report by Bloomberg.
SNB also increased its holdings of Exxon Mobile (by 48 percent) and Johnson & Johnson (by 44 percent), but no other large American firm attracted its bullish appetite quite like Apple, now the world's largest public company. Apple's flagship iPhone 6 is increasing the company's market share globally, and Apple Watch is currently so constrained that even buyers in the U.S. and other launch countries are cited minimum wait times of two to four weeks for online orders, with some models not being listed as available to ship before July.
The bank offered no comment to reporters on its accumulation of Apple shares, but its annual report notes that "Equities are managed according to a set of rules based on a strategic benchmark comprising a combination of equity indices in various markets and currencies."
The SNB is currently paying negative interest rates, while exchange rates for the Swiss Franc (CHF) have also fallen dramatically compared to the Euro, US Dollar, Yen and British Pound.
Apple's sales in Switzerland have been hurt by the falling value of the CHF, which tends to make the company's products more expensive and less profitable, a problem Apple has also been experiencing across the EU with the Euro and in Japan with the Yen, among other currencies weakening against the U.S. Dollar.
At the same time, extremely low (or even negative) interest rates have enabled Apple to borrow via bond offerings at exceptionally low rates, giving it access to cheap money it can flexibly use to pay dividends or buyback its own shares. The company's vast cash holdings, now at $170 billion globally, guarantee Apple's ability to repay the bonds enabling it to borrow so cheaply.
While the stronger U.S. Dollar should be helping Swiss watch makers to export their products to America at more favorable prices, Swatch co-inventor Elmar Mock predicted last month that Apple Watch would "put a lot of pressure on the traditional watch industry and jobs in Switzerland," noting that "anything in the price range of 500 francs to 1,000 francs ($500-$1,000) is really in danger."
Mock compared the coming impact of Apple Watch to the "quartz crisis" of the 1970s and 1980s. Swiss watchmakers had failed to anticipate the public demand for less-costly quartz watches, ceding large swaths of the watch market to Japanese firms and losing tens of thousands of jobs in the process.
"So far I see watchmakers in this country making the same mistakes as back then," Mock said. "We've seen a lot of arrogance in the Swiss watch industry in the past few years, calling the smartwatch a gadget and not taking it seriously."
Nearly 60,000 people are employed by the Swiss watch industry, and the horological industry is worth over $20 billion annually to the Swiss economy.
Comments
I see the ?watch as filling a need far outside of being a time piece... more of a personal computer always at arm's length.
The iPhone can make phone calls ...? ????
If the Smart Watch is a gadget then what about the Cuckoo Clock? There's a gadget with a long history...
Yep, those GERMANS have lots of timekeeping experience with their cuckoo clocks.
"So far I see watchmakers in this country making the same mistakes as back then," Mock said. "We've seen a lot of arrogance in the Swiss watch industry in the past few years, calling the smartwatch a gadget and not taking it seriously."
They are correct in not taking the "smartwatch" as a threat, as most of those from the likes of Pebble, or those using Android Wear and Tizen, are not a threat to the Swiss industry. They are cheap, ugly, pathetic devices that mostly only Fandroids like to show off...
The ?WATCH, on the other hand, is a HUGE threat, as it's being marketed, and perceived by many as, a beautiful time piece or jewellery, but one that offers a TON more functionality!
Not everyone needs the full functionality of the ?Watch, nor will they all want to wear the same thing as everybody else on their wrists to get it.
The ?Watch will definitely take sales away from the traditional watch makers ... but the things it can do, that wearables will provide, like POS terminals, car and door locks, etc., will be easily implemented into watches, thus mitigating the damage Apple will do to the industry. Some will hire top software engineers and develop their own smart watches that will interact with an app on the iPhone, as well as Android phones.
The watch business is unlike anything Apple has had to compete with before -- their build and precision quality is equal to or exceeds Apple's own, and they're both jewelry and a personal fashion statement. Apple will have to tackle the fashion issues on their end, the watchmakers will have to tackle the technological issues on theirs. But we're also a couple of years away from widespread contactless payment use, as well as universal door lock and car controls, etc. People are slow to adopt this kind of technology that has the ability to render them dead in the water if it fails.
Should the watch industry be worried? No. Unless they do nothing about the changing tide.
The iPhone can make phone calls ...? ????
Curiously, phone calls are something I rarely do on the device. That's what texting is for.
The first time my Watch rang with a call, I didn't realize it was basically a BlueTooth speak/listen device for the iPhone.
I answered it the obvious way and was pleasantly surprised how well it worked. Not something I would be using for long conversations though. But then I noticed as I grabbed my phone that I could Handoff to it. Apple never ceases to amaze.
Someday I should really read those webpage manuals on figure out how to really use the Watch.
Yep, those GERMANS have lots of timekeeping experience with their cuckoo clocks.
They're SWISS, not Germans! Big difference.
Not everyone needs the full functionality of the ?Watch, nor will they all want to wear the same thing as everybody else on their wrists to get it.
The ?Watch will definitely take sales away from the traditional watch makers ... but the things it can do, that wearables will provide, like POS terminals, car and door locks, etc., will be easily implemented into watches, thus mitigating the damage Apple will do to the industry. Some will hire top software engineers and develop their own smart watches that will interact with an app on the iPhone, as well as Android phones.
The watch business is unlike anything Apple has had to compete with before -- their build and precision quality is equal to or exceeds Apple's own, and they're both jewelry and a personal fashion statement. Apple will have to tackle the fashion issues on their end, the watchmakers will have to tackle the technological issues on theirs. But we're also a couple of years away from widespread contactless payment use, as well as universal door lock and car controls, etc. People are slow to adopt this kind of technology that has the ability to render them dead in the water if it fails.
Should the watch industry be worried? No. Unless they do nothing about the changing tide.
The watch is a long-term strategy. Maybe in 10 years they will have much of the functionality of a phone without a phone and will be ubitquitious. Who knows.
Right now, people are getting too worked up about the A-watch. It's too expensive for most people and they have enough trouble affording a phone. It's a watch for the affluent. So, in that sense, the Swiss maybe better be worried. They just don't have the hardware expertise of Apple for chips and such and even the software. Maybe Apple will get 25% of their market share long-term.
By then, we'll have the iRing or wearable computers such as clothing that generates electricity. Retina chips in our eyes as displays.
It will be along time before there is any potential change by the watch. Hopefully, they make the watch remarkable. So far it's a chip in a watch like any other watch and an iPhone accessory extension. It's not that earth shattering. To prove a point, even the Woz, the may who would wait up all day and night in line for a phone or an iPad is meh on the watch and he doesn't seem to care. What that means is the Apple watch is "not all that".
Almost all other Apple products were earth shattering or amazing (we can ignore the Performa line of computers). Even something like the eMate 300 was pretty amazing. Or the original laptops and so on. The watch is just an overpriced accessory.
Yep, those GERMANS have lots of timekeeping experience with their cuckoo clocks.
They're SWISS, not Germans! Big difference.
To Americans, not so big a difference. They are pretty much the same. Same with the Austrians.
Not everyone needs the full functionality of the ?Watch, nor will they all want to wear the same thing as everybody else on their wrists to get it.
The ?Watch will definitely take sales away from the traditional watch makers ... but the things it can do, that wearables will provide, like POS terminals, car and door locks, etc., will be easily implemented into watches, thus mitigating the damage Apple will do to the industry. Some will hire top software engineers and develop their own smart watches that will interact with an app on the iPhone, as well as Android phones.
The watch business is unlike anything Apple has had to compete with before -- their build and precision quality is equal to or exceeds Apple's own, and they're both jewelry and a personal fashion statement. Apple will have to tackle the fashion issues on their end, the watchmakers will have to tackle the technological issues on theirs. But we're also a couple of years away from widespread contactless payment use, as well as universal door lock and car controls, etc. People are slow to adopt this kind of technology that has the ability to render them dead in the water if it fails.
Should the watch industry be worried? No. Unless they do nothing about the changing tide.
LOL. You are in as much denial as the watch makers.
Bottom line is people only wear 1 watch at a time so the AppleWatch is a massive threat.
You sound like the Nokia/Blackberry guys in 2007 who talked trash about the iPhone.
The AWatch could be a threat. We don't know. At this point, pretty much no threat. Most people don't seem to really care.
The watch is a long-term strategy. Maybe in 10 years they will have much of the functionality of a phone without a phone and will be ubitquitious. Who knows.
Right now, people are getting too worked up about the A-watch. It's too expensive for most people and they have enough trouble affording a phone. It's a watch for the affluent. So, in that sense, the Swiss maybe better be worried. They just don't have the hardware expertise of Apple for chips and such and even the software. Maybe Apple will get 25% of their market share long-term.
By then, we'll have the iRing or wearable computers such as clothing that generates electricity. Retina chips in our eyes as displays.
I agree. It's a foothold into the wearable market, for which anything is possible in a very few years. But the watchmakers have as much ability to acquire the engineering expertise to incorporate smartwatch features into their watches as Apple had acquiring their fashion personnel to design and market the watch. They won't all be successful, but they don't have to be to survive.
It doesn't matter what they wear. What matters is what they buy. People that buy automatic watches buy more than one, and will continue doing so.
Mostly by people that never have nor would've purchased a Rolex.
Oh don't go there. You wouldn't want to follow that rabbit hole...or should we say nazi gold
Sadly, it's what comes to mind when you mention Germans and the Swiss National Bank together. They do have an alleged shared history, or at least notoriety.
Ach ja... The Watch will sell substantially, it is an incredible device, and it will impact the watch industry (especially in the USD 350 - USD 700 range) but the watch industry is not like the phone industry, inasmuch as most people have one phone but own multiple watches. So there is room for many players.
Back of the envelope estimates could be that of iPhone users (30%), some (30%?) will buy the Apple watch as one of two watches they own (50%), ie impact is .3 x .3 x .5 = 5% market share. Meaningful, but not comparable to the impact they had in the phone industry. (I did not include first time watch buyers, as arguably, they would not have bought a Swiss watch).
His point was that cuckoo clocks are German, not Swiss.
... And by people that already have a Rolex, and an Omega....