11/11/2014 Could a ‘Swiss made’ iWatch alone add 1%-point of GDP to Switzerland? | Transformation Hydraulics

http://schobinger.wordpress.com/2014/07/12/could-a-swiss-made-iwatch-add-1-point-of-gdp-to-switzerland/ 1/6

Transformation Hydraulics

THOUGHTS ON BUSINESS STRATEGY, AND HOW TO MAKE ITWORK. BY NICOLAS SCHOBINGER.

iWatch, Apple’s highly anticipated new smart watch is expected to belaunched with much fanfare later this year. Assuming the iWatch wouldcarry a ‘Swiss made’ label and it would ship after final assembly fromSwitzerland, what would this mean for Switzerland and itswatchmaking Industry?

I think it would be VERY transformative to Switzerland:

Could a ‘Swiss made’ iWatch alone add 1%-

point of GDP to Switzerland?

2

Jul

12

11/11/2014 Could a ‘Swiss made’ iWatch alone add 1%-point of GDP to Switzerland? | Transformation Hydraulics

http://schobinger.wordpress.com/2014/07/12/could-a-swiss-made-iwatch-add-1-point-of-gdp-to-switzerland/ 2/6

Apple would become the leading Swiss watch brandSwiss watch exports would more than double in volumeSwiss GDP could get up to 1%­point growth on top

These impacts are based on 33.5 million iWatches to be sold, at 250USD average sales price, and thus 8.4 billion USD revenue to begenerated in the first year. I took the average assumption fromfinancial analysts, in that case from BMO Capital Markets (for a goodsummary of UBS, Morgan Stanley, BMO Capital Markets see here).

In comparison, Swiss watch exports were approx 23 bUSD (20.6 bCHF)and 28 million units. Such statistics are sometimes skewed (re­exports, no domestic consumption, etc), but it is a good indication andit’s official data (see Federation of the Swiss Watch Industry below). Soa ‘Swiss made’ iWatch would lead to that statistics to grow 2.2x involume and 1.3x in value – in one year.

The three biggest Swiss watch houses are Richemont (IWC, Cartier,Montblanc, Piaget, Jaegere­LeCoultre, Panarei, Vacheron­Constantin,…) with revenues around 14.5 bUSD, the Swatch­Group (Swatch,Breguet, Omega, Tissot, Rado, Blancpain, …) with 9 bUSD, and Rolexwith 5.5 bUSD. I took this from second sources, as the industry is verysecretive on revenues. Most companies do not publish official data..

Apple would, with 8.4 bUSD and just ONE brand, be the leading Swisswatch brand.

The swiss GDP was, according to the World Bank, 651 bUSD in 2013.This was a 3.1% growth based on current USD. Adding a fictive 8.4bUSD from the iWatch, you get an incremental GDP growth of 1.3%­point. As the iWatch would typically be shipped to retail subsidiariesbased on transfer prices (not the retail prices), this impact would belower – to be very conservative, lets say just a ⅓ of this amount. Youstill get close to 0.5%­points of incremental GDP­growth. And one caneasily imagine that sales in the second year would double. So yes, a‘Swiss­made’ iWatch would add 1%­point of GDP. Again, this wouldbe BIG news for a launch year.

11/11/2014 Could a ‘Swiss made’ iWatch alone add 1%-point of GDP to Switzerland? | Transformation Hydraulics

http://schobinger.wordpress.com/2014/07/12/could-a-swiss-made-iwatch-add-1-point-of-gdp-to-switzerland/ 3/6

‘Swiss made’ iWatches would certainly have a material impact also on

other dimensions. Take the labour market for instance, and what it

implies in terms of time to make the necessary workforce available, as

well as the absolute numbers needed. Or take manufacturing

innovations in automation, robotics or advanced materials needed to

cope with high costs of Switzerland or with the sophisticated design.

Although already well addressed by established watch­makers (e.g

Swatch, Rado, Rolex, Eta), I assume the iWatch would push

innovations in manufacturing even further. Faster.

Taken together, this sounds like a massive opportunity for a whole

country. The scale and the pace alone, is already staggering.

Truly transformative.

 

Copyright 2014 Nicolas Schobinger. All Rights Reserved.

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11/11/2014 Could a ‘Swiss made’ iWatch alone add 1%-point of GDP to Switzerland? | Transformation Hydraulics

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2 THOUGHTS ON “COULD A ‘SWISS MADE’ IWATCH ALONE ADD 1%­POINT

OF GDP TO SWITZERLAND?”

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