Does Swatch desperately need an iWatch rival?

Swatch Smartwatch Release DateImage Source: Eric Huisman / Apfelpage

Despite dismissing smartwatches in the recent past and denying that it’s working with Apple on future iWatch versions, Swatch is actually developing its own smartwatch, The Wall Street Journal has learned, hoping to better compete against the wide range of devices already available in stores — and particularly against the upcoming Apple iWatch, a looming threat for the company.

Swatch’s smartwatch will be released in 2015, more than 10 years since its previous failed experience with similar devices, and is expected to integrate various new features including the “usual” fitness functions, among other things.

Specific details aren’t available about the Swatch smartwatch, and it’s not clear what operating system it will run.

However, analysts see Swatch as a vulnerable target for existing smartwatch makers, as the Swiss giant makes 30% of revenue from low- and mid-range brands that retail for roughly the same price of a smartwatch. Exane BNP Paribas thinks that Swatch could lose as much as 10% of sales of entry-level devices and 5% of mid-range brands to competing smartwatches, in the following two years.

“[Swatch CEO] Nick Hayek is very concerned for sure,” Bernstein analyst Mario Ortelli said. “But he can’t say that publicly.”

Apple might be Swatch’s biggest concern, as the Smartwatch Group consultancy group sees the company selling 4 million iWatch units this year – assuming the device actually hits the market in 2014 – and up to 50 million units in its first year.

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