This news is a huge deal for the watch industry. About two years ago the Swatch Group
announced that its watch movement making division ETA
would stop selling watch movements to watch makers who are outside of the Swatch Group brands in 2010. ETA is the largest and most popular watch movement maker in all of Switzerland - supplying movements to most Swiss watch brands and anyone else who utilizes Swiss movements. ETA makes a wide range of movements from high end mechanical movements to quartz movements.
Swatch Group brands include companies such as Swatch, Hamilton, Tissot, and Omega. These brands receive their movements from sister company ETA, while ETA also currently sells movements to outside brands. According to Chairman Nicolas Hayek of the watch group, that is all about to change. He is reaffirming Swatch Group's position that ETA will cease providing movements to competitors. The wisdom of the decision is arguable, but it looks like it is going to happen.
ETA has been under investigation by Swiss government authorities on whether this move is illegal and anti-monopolistic. Probes have been launched in the past as well to identify whether or not ETA was engaging in unfair pricing and related charges. The current probe is likely interested in whether such practices of shutting out Swiss watch brands that are important to the Swiss economy is a legal move by the Swatch Group.
A real question emerges of where watch brands will now go to get Swiss watch movements, or any movements for that matter. The move could spell death for legions of brands who are reliant on ETA to offer "Swiss Made" watches. In fact, it will likely spell death for many brands. At the same time it is a golden opportunity for competitors to come in and provide watch movements. While the creation of the tiny parts for movements is highly sophisticated, ETA does have Swiss competitors. Companies such as Sellita and Ronda may quickly step in ETA's shoes to fill the gap.
Most of ETA's high volume movements are not covered under intellectual property rights any longer. Such patent rights only have limited times of protection until their covered technologies can be produced by anyone with the skill. As such, ETA movements such at the 2824-2 have been "copied" by brands such as Sellita (with their SW200 movement) for a while. Plus, some brands might turn to the Japanese who have been making quality movements for years. While Japanese movements don't have the same special power to excite consumers that "Swiss Made" movements do, we may see watch companies turning to them out of sheer need.
Sometime in 2010 ETA will cease or begin to stop selling watch movements to outside Swatch Group brands and the market will have to adjust. We will wait until that time to see what the resulting watch industry reaction is.
Ariel Adams publishes the luxury watch review