History – Quartz Crisis or Revolution?

Tags: Technology and concepts | Classic

16.12.2023 | 10 MIN

This story is as old as the world itself - the new, modern and predatory aspect will overcome and replace the outdated aspect. Automobiles instead of horse-drawn carriages, quartzes instead of mechanics... That's just the way the world works. But as we know, the watchmaking world must always have something special. What was the whole quartz crisis or revolution all about, and why is it that nothing modern in the watchmaking world can overcome the obsolete aspect?

All those undeniable practicalities and affordability leave no room for conjecture as to why the current watch market is 90% made up of quartz (battery-powered) watches at the expense of mechanical watches. Yet the quartz have not been with us that long. Officially some 55 years... But in that time, they've managed to throw some serious curveballs at the watch market.

History of the Quartz Crisis - The ASTRONOMIC Assassination and the First Battle Called "Digital"

The official beginning of the famous "Quartz Crisis", mentioned hundreds of times by all watchmakers, dates back to 1969. That very year, at Christmas, a gift arrived from Japan. The first quartz wristwatch, which was to change the world as we know it forever... Okay, that may have been said a little too dramatically but perhaps that's how fatally the traditional Swiss watchmaking industry viewed the situation, which was swept away like a tsunami by the advent of the quartz watch.

The very beginnings of the quartz watch can be traced back to 1880, when the piezoelectric properties of quartz were discovered, after which the first working quartz watch was made by Joseph Horton and Warren Morrison in 1927 (at Bell Laboratories). However, at that time, it was a big table-top affair and far from the quartz watch as we know it today.

Seiko Astron z roku 1969.

Seiko Astron from 1969.

It was Seiko's famous... no - most famous watch, the Astron, that fired the first revolutionary salvo. A new, very accurate and practical technology for the time, and one that countless watch aficionados craved. But it was not yet a mass affair. In 1969, the first swallow flew out in the form of a limited edition of 100 pieces in a gold case and at a price equivalent to that of a more luxurious car (the Calibre 35A oscillated at a frequency of 8,192 Hz and its accuracy was quoted at 5s per day).

Today, fittingly, the hyper-modern Seiko Astron watch emerges from these watches, synchronised by GPS to guarantee near-perfect accuracy.

After this sensation, not only the Japanese but also some Swiss and other watchmakers began working on developing and improving the quartz movement, which they subsequently presented at the 1970 Basel Fair (among them Omega, Bulova, Rado, etc.).

Vzácné Rolex Texan s quartzovým strojkem Beta 21.

A rare Rolex Texan with a Beta 21 quartz movement.

The Swiss came up with the Beta 21 quartz movement, which was used in the 1970s by Omega, Rolex and Patek Philippe, among others. But the sales were not worth mentioning... But Seiko opened one boutique after another.

A year later, in 1971, Seiko put another Astron in front of its customers. It may surprise some that it still wasn't the crazy, mass-produced watch that would turn everything upside down overnight. And that the first real "quartz battle" was not fought by the Japanese...

Moreover, the real star that caused the frenzy was not analogue, but digital: the 1972 Hamilton Pulsar. Hamilton chose the name perfectly. Pulsars are rotating neutron stars that emit electromagnetic radiation and by rotating, their light creates a beacon effect. It was the Pulsars that became a beacon in the sea of traditional watchmaking, attracting attention of enormous proportions. And the fact that James Bond wore them probably helped. Among other things...

Before the Seiko Astron and quartz watches came along, multiple watchmakers/inventors attempted various alternatives to electronic watches. The race for the first electronic watch was won by the pioneering (then still American) Hamilton with the 1957 Electric 500 (today's Ventury), whereupon their technology was surpassed by the legendary tuning Bulova Accutron in 1960. It was believed that Accutrons would revolutionize mechanical watches and that they would grace everyone's wrist in the future. Well, they didn't quite succeed. But their influence was huge.

So, in the '70s, digital watches dominated the scene and the whole world took notice. The US reacted strongly to the situation, with electronics companies infiltrating the watch segment. But not only those, for example, the American Bulova also came up with the awesome Computrons at that time.

307,00 € in stock

In Japan, Seiko was the leader (e.g., Citizen's sales were one-quarter of Seiko's; another competitor was Casio, which came a bit later with its real breakthrough, the G-Shock). By this time, Seiko was also investing in equipment and robotic lines for mass automated production that the Swiss could not compete with. Pulsar's star was slowly setting.

Seiko then eagerly produced both digital and quartz analogs, and even came up with the first all-women's analog quartz watch (1972). Seiko then introduced the first digital LCVFA (and the world's first digital watch with a six-digit display) in 1973. The watches were low power consumption and could display seconds.

A year later, in 1974, Casio introduced the famous CASIOTRON.

Zdroj: https://habilitateblog.com/the-history-of-casio-watches/

Source: https://habilitateblog.com/the-history-of-casio-watches/

And so it went on. The "digitalisation" of watches brought new demand, the development of new markets in Asia and Latin America, and changes in the watch production system itself (mass production, etc.), and of course prices. The crisis begins.

Battle Two - the crushing blow of Seiko and the crisis of Swiss watchmaking

Let's make a little linguistic stop: if we look at the well-established phrase "quartz crisis", we come to the conclusion that it can be misleading because it sounds relatively imprecise. Someone not familiar with watches, for example, might very likely think that it was a crisis that hit the quartz watch market, not a crisis caused by quartz. A more accurate wording might thus be "the crisis of traditional Swiss watchmaking", "the crisis of mechanics" or, best of all, "the quartz revolution", referring to the upheaval that quartz watches caused.

In the 1970s and 1980s quartzes brought the watch industry to its knees and Switzerland suffered the worst economic crisis in its history. One could perhaps even speak of a brutal watch defenestration, for within 13 years the careers of around two-thirds of the employees in the traditional watchmaking sector - until then Switzerland's most valuable industry - had gone out the window.

Ženevský hodinář, 1921. Zdroj: https://www.watchesandculture.org/

Geneva watchmaker, 1921. Source: https://www.watchesandculture.org/

Before the crisis, Switzerland had almost no competition - it was also the source of around 95% of all watches produced and 90,000 people worked directly or indirectly for the watch industry. Top of the market, synonymous with quality... This was helped both by a long tradition and by the fact that the Swiss remained neutral during the world wars and were thus able to continue producing watches for the public, while the countries involved in the wars had to concentrate their watch production on the needs of the armed forces.

As mentioned above, the Swiss also responded to the quartz wave. But in their own way. Compared to the (mostly) Japanese watches, the Swiss ones were given craftsmanship care and therefore a higher price. So they often had to end up being sold at a significant discount and the competition was hard to resist.

By 1977 Seiko had become the largest watch company in the world, by which time its sales had reached $700 million with 18 million units produced (Timex was second, but it accounted for almost half of the sales). So not 1969, but 1977 was the year in which Seiko really took over the market.

History of Timex – American watches for everybody. Including presidents.
History of Timex – American watches for everybody. Including presidents.

Seiko obchod v Ginze.

Seiko store in Ginza. Source: wikipedia

By churning out both analogue and digital watches in equal measure, Seiko gained quite an advantage (other companies gradually focused more on one or the other). K. Hattori & Co., the maker of Seiko watches, became the undisputed king of the global watch industry in the late 1970s, with sales of $6 billion (according to Business Week).

How did Switzerland save itself?

Many Swiss watchmakers still fought the new fashion tooth and nail. Traditional methods, handed down in small family businesses from generation to generation... How could they give up something like that? And so, out of 90,000 people in the industry, only 28,000 remained - those who adapted.

In the 1980s, the fragmented Swiss watchmaking industry was stitched together into the last great resistance groups with a long tradition: SSIH, whose star was Omega and ASUAG, with its main brand Longines. At this time, namely 1978-1985, two important personalities who were to play a decisive role in the "last battle" - Ernst Thomke and Nicolas G. Hayek.

Everyone knows the name of the second gentleman and we will get to him. Ernst Thomke (watchmaker and academic) became famous precisely because of his association with ASUAG, which asked him for help in 1978. Thomke took the helm of Ebauches SA, an important part of ASUAG that focused on the manufacture of watch movements for a number of Swiss customers and importantly, initiated a thorough restructuring.

Thomke's moves were deliberate and more than ingenious... and worthy of its own article. In short,however, suffice it to say that thanks to him and a series of effective decisions, Ebauches became ETA, the largest and most important watchmaking company, which, under the new management also adapted to the production of affordable analogue quartz. ETA's competitiveness was the first Swiss victory.

Still, it was not enough and the whole situation seemed almost hopeless. And so a second hero arrived on the scene, and without exaggeration, Nicolas Hayek. A management consultant and owner of Hayek Engineering in Zurich (a top consulting firm), who was commissioned by the Swiss banks in the early 1980s to analyze the situation. Hayek was always a dreamer and could think radically, beyond the established rules and probably because of this he came up with a solution to get out of the crisis.

Swatch – The story of a company that saved Swiss watchmaking
Swatch – The story of a company that saved Swiss watchmaking

The Swatch Group is formed

Nicolas Hayek saw hope in uniting the two largest watch groups (ASUAG and SSIH) to form one strong umbrella brand. He did so in 1983. The new company was named SMH (Swiss Corporation for Microelectronics and Watchmaking), with all movement production being entrusted to ETA, which was newly adapted to this. The other brands that had previously produced movements now concentrated on marketing, design, sales, etc.

Nicolas Hayek.

Nicolas Hayek.

At the same time, the new SMH needed to create a key product that would relaunch the Swiss economy. And so Hayek took a step that was extremely bold, provocative and also very unusual for Switzerland.

The Swiss banks were also a big help, pumping more than 550 million Swiss francs into the watch industry in a series of rescue packages between 1981 and 1983.

Hayek offered the world a new Swatch watch - plastic, colourful, incredibly playful and also incredibly cheap. One that could not only compete with the Japanese salvo but even surpass it in originality. Finally, Swatch could also use the important argument of Swiss origin, which still had a strong ring to it despite all the difficulties.

The empire struck back - Swatch became a pop culture sensation virtually overnight, injecting life (and, more importantly, financial backing) into the veins of the traditional watch companies under SMH, which Hyek later grouped into the famous Hayek pyramid. No wonder he renamed SMH the Swatch Group in 1998.

Současná pyramida značek Swatch Group.

The current pyramid of Swatch Group brands.

Swatch marked a turning point and a lifeline for the Swiss. Before that, between 1974 and 1983, Swiss watch production had dropped from 96 million to 45 million. Swatch then took two years to bring production back to 60 million. Of course, 80% of them were in quarto. But the important thing is that SMH was in the black in 1983.

The crisis was averted, the traditional Swiss watchmaking survived thanks to the Swatches, and one could say that everything turned out well. Of course, the development of the whole situation and of watches has continued since then and it could be said to be going by leaps and bounds. It is even beginning to seem that the classic analogue quartzes are slowly but really slowly, giving way. Which may perhaps mark the arrival of a second quartz crisis... But this time in the true sense of the word. Something like this will definitely not come overnight.

What is the status of quartz today?

In any industry, healthy competition is needed. And once the traditional watchmakers had recovered from the worst, they took to their fancy mechanical timepieces with even more vigour than before. After all, now they have something to define themselves against.

Mechanical watches generally appeal to different emotions than quartzes, they are seen as something prestigious, traditional, with a soul... Quartzy as a matter for the masses, belonging more to the fashion segment. However, this premise has been increasingly washed away and mixed together in recent years (we also have affordable, belt-made mechanicals, and conversely beautiful, meticulously made and luxurious quartzes). Yet certain die-hard watchmakers still have an irrational aversion to quartz watches (but what's rational about loving watches, right?)

The two worlds are no longer in competition. They function not just side by side but together - in a kind of peaceful watch symbiosis (which is also why many brands offer both in their collection). People have been given a choice and that's how it should be.

And if there's another similar twist coming? Well, if the classic watch hasn't been swept away by the advent of smartphones and watches, nothing probably will.