← Openwork: Inside the Watch Industry
Openwork: Inside the Watch Industry
Signs of Hope for an Industry Under Pressure – Tariffs, Supplier Woes, the Rise of India and New Releases – Episode 58
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- [00:00]
A
I'm going to do something that I've never done on this podcast before, which.
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B
Is buy a watch.
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A
No, I'm going to, I'm going to compliment this watch group.
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B
This is openwork, a look inside the watch industry, a podcast from Collective Horology. I'm Gabe Riley, co founder of Collective.
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A
And I'm Asher Rapkin, co founder of Collective. Collective Horology is an independent watch retailer based in Southern California. We carry a wide range of independent brands including Renault, Tixier, Holthenrix, Zeitwinkel and more. To learn more about us and check out our available inventory, Visit us at collective horology.com Asher Big news.
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B
Openwork is going weekly. More work, more work. You know, we've done the podcast and we committed to doing the podcast since we started a couple of years ago, bi weekly. So every two weeks and from time to time, either because of current events or a special event or a special guest or whatever it might be, we've done weekly. But it's been sporadic, to use the words of the great words of the movie Clueless. And I think what we decided is to try doing weekly podcasts and we're going to do things a little bit differently. So every other week, every two weeks, just as we've always done, we're going to have episodes that are kind of in depth and focus around a particular topic or guest. And the reason why is that's been the bread and butter of the podcast and you know, the feedback is strong there. And we've, we've certainly grown a lot and grown the audience doing that. So we're going to keep doing those. So if you want topics like how watches are priced or whatever it might be, we're going to keep doing those every other week. So sort of on the off weeks relative to those kind of classical or the classic open work episodes, we're going to do things that are more topical. So we're going to cover kind of like current events in the watch industry. So the focus is still 100% on the business of watches. We're not talking about watches or making recommendations for movies you should watch or things like that. It's still going to be tightly focused around the industry and the business of watches itself, but we're going to focus on, on sort of news stories. And the reason why is when we look at the data so we dig into what people are listening to, which episodes get the most downloaded, they're really the episodes that are the most kind of topical and newsworthy. So when we do episodes on Tariffs or the acquisition of Hodinkee or whatever it might be. Those are actually the episod and significantly so that get that get the most listens. And so that tells us that what you guys want to hear is about things that are newsworthy and timely. So that's what we're going to do here today. We kind of have three stories from the last week or so in, in the watch industry that we'll, that we'll cover. So it'll be a little bit different. It's Asher and I focusing on those stories. So what do you say? Should we dive into our first story, which is surprise, surprise, Tariffs, updates to tariffs. So, Asher, what is going on in the world of tariffs?
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A
Okay, so on November 14th of this year, there was an agreement that was reached, a verbal agreement between the Swiss trade delegation and the United States that essentially reduced the punishing 39% Swiss tariff to 15%, putting it on par with the European neighbors that surround the Swiss. This, of course, is phenomenal news for the industry in general, for collectors and for others, because it obviously significantly decreases the overall capital required to import a Swiss watch, regardless of whether you're doing that at wholesale or retail. But there's a catch, which is this is a verbal agreement, it's not a formal agreement. And the tariffs themselves have not actually been reduced as of the date of this recording, Friday, December 5th.
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B
So we're almost, almost a month into this and the tariffs are still at 39%. And to be clear, there is no official word of when that rate will, will change from 39% down to 15%. So we're, we're waiting. You can imagine. We, we check daily. We wait with bated breath. But for, for the foreseeable future, we're still in that 39% window. From what we understand from Swiss, the Swiss trade delegation themselves and represent representatives of the Swiss government. They're expecting it will be sometime in December, but there's no clear timeline and it really has nothing to do with the Swiss at this point. We're waiting on, on the US Government to issue an executive order and then have the Department of Homeland Security, so Customs and Border Protection make it official and, and put this into the, into the tariff schedule. So still at 39%.
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A
But that's not all on, I believe November 3rd. I might have my date wrong on that. Essentially it was the day after Election Day. The Supreme Court also heard. The case has been making its way through the starting the Court of International Trade making its way to the Court of Appeals and now ultimately in front of the Supreme Court to discuss the validity and the legality of the implementation of these so called reciprocal tariffs. And what was interesting from that, and there's lots, lots of ink has been spilled on this and I'm certainly no legal expert, but the arguments that were being made were pretty fascinating. And I encourage folks that are curious about that sort of thing to go check it out. One of the biggest things that the Supreme Court appears to be picking apart in the argument related to tariffs is around this idea that one of the co equal branches of government here in the United States, that Congress would be able to cede power to the executive if they so wished. So, for example, the power to tax. And there was some debate about whether a tariff is a tax. Personally, I think it's a tax, but I understand that's a semantic distinction. But Congress, who has the, the unilateral right to tax or impose taxes here in the United States, is claiming that they have essentially ceded the right to do so to the Executive.
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B
Well, they're not claiming that the, the executive.
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A
Thank you.
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B
The executive Trump administration is.
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A
And the Supreme Court appears to be taking significant issue with that, saying that, well, realistically, if you concede that power, what other powers can the executive claim have been ceded to them? So what's interesting about this case in particular is it's not just a commerce case. The implications appear larger and more constitutionally fundamental or more fundamentally constitutional than, than I as a non legal eagle and a layperson would have originally thought. Now, they have agreed to review these tariffs on or this case on an expedited timeline. That means we'll probably hear something earlier than the end of the session. People had originally thought it could be as early as this month, maybe next month. We'll see. So if you zoom back out from a tariff standpoint, two big things happening that relate to the watch industry. The first is this hypothetical reduction. There's an agreement, but there is no reduction. It's still 39% today, December 5, to import a watch from Switzerland, or rather import a Swiss made watch from any port into the United States. And then there's a question that even supersedes that one, which is, is any of this legal to begin with? Which is what the Supreme Court is grappling with now. So no matter what happens with the implementation of the 15%, there's still the proverbial shoe to drop, which is what the Supreme Court of the United States will ultimately decide in that case.
- [07:29]
B
All right, so tariffs, it's what, what a tangled web. We Weave. And I think what's interesting is if you look at the next story, which is U.S. retail and the strength of U.S. retail, what's, what's so shocking to me, and I've said this before, never underestimate the strength and the, the resiliency and the fervor of the American consumer. But it's, it's an interesting, it's an interesting story when you look beneath the numbers here. So basically what, what we're seeing is that the watch industry in the United States continues to perform. And the latest sign of that was actually from Watches of Switzerland. So the Watches of Switzerland group delivered their sort of half year earnings update and they are earning more this year than they did in the same time last year, really on the back of growth in the United States. So the US Continues to be a growth market for them. Despite all of the economic challenges of tariffs and the price increases that are, that have been related to them. People are still buying watches. However, it's sort of a tale of two cities. So we've talked in the past, you know, we looked at the last 10 years of the US watch market and we talked about the fact that really the watch market and the growth of the watch market and this has accelerated in the last few years has been driven, driven by the big four, Rolex, Patek Philippe, Audemars Piguet and Richard Mille. And that is exactly what we're seeing happen here both in the new and in the pre owned market. So in the new market what we're hearing from Rolex retailers is that despite price increases, despite the challenges of tariffs and you know, the perceived issues that might create for clients like ambivalence around buying or things like that. That's not in fact the case. Rolex retailers are report that sales continue to be strong in the US and then in the pre owned market we're seeing the same thing. The pre owned market seems to have turned the tide. I'd love to have Hamza back on to do kind of a year and review the pre owned market. But what we're seeing with the pre owned market is that yes, in aggregate pre owned watch prices are up. However, that's really focused around Rolex, Audemars, Piguet and Patek Philippe driving that the rest of the market by and large, so most brands pre owned continue to see declining prices and declining demand. So as we've said before, the US market is remarkably resilient, but it's really being driven by the high end and in particular it's really being Driven by Rolex, Patek Philippe and Audemars Piguet. And that trend continues.
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A
Yeah. So I have a theory about the watches of Switzerland earnings and mind you, this is purely a theory. I'm not pulling on any secret data for this but just looking at the way things are structured. So watches of Switzerland and we saw this and I think we'll touch on this in a minute when we talk about Dubai Watch Week. But Watch of Switzerland still is and remains one of the largest retailers of Rolex watches globally. And if you look at the way that the Rolex Corporation is structured and the way that they import their watches, it creates a little bit of insulation for the watches of Switzerland group here in the United States. What I mean by that is Rolex has a subsidiary here in the United States. They import their, their watches at a transfer pricing which allows them to have some degree of insulation against the punishing 39% tariff. And they then distribute and sell those watches to their dealers here in the United States in United States dollars. So what this essentially means is there's a form of insulation for that group where they're not as now, I don't know how their margins have been affected by this. But putting that aside for a moment, just in broad strokes, because they're buying in dollars, they're insulated from the currency fluctuation effects that so many of other retailers who buy direct are being impact. And two, they're also, they're also shielded from a lot of the pain of the tariffs fundamentally because the tariffs are assessed on the transfer pricing of the watch, not the retail price or the wholesale price of that watch. So the overall impact financially is of course meaningful, don't get me wrong. But it's, it's significantly controlled and somewhat absorbed by Rolex which has essentially unlimited resources to be able to manage what is for them a speed bump, for others a fundamentally earth shattering political change.
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B
Yeah, but the demand is also there. I think the market is an indicator of that too because look, none of.
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A
But I'm talking about the profitability of watches of Switzerland and why that might be a little insulated.
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B
Oh, I don't know about profitability. They're talking about top line revenue.
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A
Oh, okay, got it, got it, got it.
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B
But look, if you told me six months ago, a year ago that we would have 39 tariffs or really any tariffs at all and watches more than.
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A
Six months ago now man would be.
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B
Yeah, or, and that, well, I don't think we knew it was going to be 39% six months ago. But yeah. If you told me a year ago any of this stuff was going to happen and watches of Switzerland would be reporting this, Rolex dealers would be reporting this. Our own business, I mean, has more than doubled year over year despite the tariffs. If you told me any of that was going on, it would be, it would be to me rather remarkable. And so I think, look, you're right, there are different brands that have ability to help, help themselves, you know, navigate these pressures and reduce the burden of, of tariffs for sure. But they still are having a real impact on the market, particularly for new watches. And demand remains strong, which is, which is great to see. Let's talk about Dubai Watch Week now. Two things are remarkable to me about Dubai Watch Week. This is an event that obviously has impact way beyond Dubai itself and, and the, the region in the Middle east itself. It's certainly the signature event in that part of watches, but it's, it's truly a global event. We know folks not only have brands, we have clients who traveled.
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A
And you even participated in the off year event.
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B
Yeah.
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A
When it was New York. What was that called? New York. Oh, the, I think Horology Forum.
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B
Horology Forum, yeah, New York. Pretty remarkable event in terms of its production value and its scale. But you know, officially 90 brands participating, which further I think puts events like obviously Watches and Wonders, but Geneva Watch Days and New York Watch Week, which we sort of informally call it, into focus. These are huge events. I mean 90, 90 brands. At Dubai Watch Week there were hundreds of brands literally participating in some official capacity in, in New York Watch Week. And I think it underscores for me that that is a, that that New York Watch Week and Geneva Watch Days are these massive events that have just sort of grown right in plain sight.
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A
Yeah. And credit needs to go to the Siddiqui's because of course they are the ones who promote and, and run this event and, and frankly have, have been pouring just incredibly large amounts of money into it for a decade plus between this and Horology Forum to build this into what it has turned into. So I think, you know, credit, where credit is due to the incredible generosity of the Siddiqi family to the watch world in general to create an event like that.
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B
Can you imagine creating an event ourselves with 90 brands participating? I mean we do, we do open house, but it's a, it's a fraction of that. It's a, it's, it's an incredible amount of effort. But to your point, it's also a huge investment that they make in this.
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A
Yeah. And they are also, I think it's important to note they're extremely generous too. I mean a lot of the people who attend these events are flown there by the Siddiqui, are put up by the Siddiqui. You know, this is, it's not just the cost of the event itself. It's all the surrounding ancillary costs that go into it. And you know, by all accounts that generosity is extraordinary. So I think it's important just to recognize that and give them the credit and thanks that are due to them from the community because there's a ton that comes out of, of that, of that event. You know, commerce notwithstanding, content, new watches, a platform for a lot of independent watchmakers that I think they deserve credit for.
- [15:46]
B
Well, I want to ask you about some of the new watches, but before we do, I think one of the things that was interesting about the event this year was the focus on the industry itself. So as with all these events, there are, you know, these keynote speeches and fireside chats and panels and all this kind of stuff and more so this year and this was really in, in the reporting. So for instance, you know, yach, Yahoo Finance reported quite a bit on, on Dubai Watch Week from a business standpoint. And one of the things they pointed out was the, the focus on, which is different from years past, the focus on industry specific topics, the topics on the business of watches. And in particular a lot of the discussions in those panels and those CEO discussions was around tariffs, macroeconomic challenges and long term industry threats like watchmaker shortages and vulnerabilities. And what's interesting is the supplier vulnerability thing came up from a number of, of industry speakers and it seems that what's going on and you know, there's that famous saying and it's sad but true, shit rolls downhill. You know, we're in this going for the explicit tag.
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A
Gabe.
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B
Yeah, well, we'll, we'll have to, we've had plenty of cursing on this podcast. But you know, we've talked about the overall slow like US Market withstanding the overall slowdown in the, in the watch industry in the last year, two years. And it seems that who that is hurting most and most visibly right now are the suppliers. So these are smaller companies, they're highly specialized, they depend on contracts with, with the brands. And you can imagine if you're a watch brand and you need to reduce cost in an environment where your business isn't growing, the first thing you're probably going to is not lay off your own employees and maybe not even make you know, cuts in marketing and things like that, which inevitably happen, but it's probably to address your supplier contracts and start making cuts or ordering less components. And what we're hearing from executives is that the, the component makers are the ones who are really starting to feel the pinch. We're seeing this in the news as well, just reported more broadly, you know, the, that one of the great fears about the tariffs that I think sort of ended up coming true, at least initially as the industry navigated them, was the idea that there would be job losses, particularly among suppliers. And that's there have been job losses in general among the suppliers in the last couple years and the tariffs seem to have exacerbated that as the industry sort of got ready for the worst. So this isn't great. You know, we need suppliers. We've talked in the past about how important they are to innovation in the industry. You know, these are the people that make the stuff and supply components and come up with ideas that can be breakthroughs. So not great news.
- [18:43]
A
Yeah, I mean, I don't have a whole lot to add to that. I think it's probably pretty clear that I find, I mean, look, we sell international goods, we're a global company in that regard. And I don't love the idea of smoldering innovation out with the tools that have been leveraged against the business. But this is the economic reality that we find ourselves in. And I think, think while I appreciate the candor of that and as we talk about the impact of it, part of this is also going to be a long term reality because what's going to happen, I suspect is let's assume these tariffs do come down or maybe they go away entirely, who knows? There's still economic impacts that have happened down that supply chain and people are going to need to recoup those expenses and that's going to change the dynamics and the contractual terms that people have to make sure that funding continues to flow, which is going to impact the overall pricing of production. So the reality is when we talk about like increases in prices over time, it's not just what's happening in, you know, the today, which is, you know, the currency fluctuation and the tariff implication or tariff application. It's also how people are going to ultimately attempt to recover from the brutality of the losses that they've had over that period of time and try to figure out different terms for their agreements, try to figure out, you know, different pricing for their products. It may get to a point where people say, okay, I need you to pay for product 100% upfront, because I can't take the risk that you're going to bail on it. It, you know, and those sorts of things impact the overall cost of a product to the end user. So there are second and third order consequences to what has happened here economically, not just in our tiny little industry, but, you know, on a global scale that will roll out even if the inciting event, the tariffs, go away.
- [20:24]
B
Well, this is a really important point about pricing pressure in general. So one of the things, and I totally get it, one of the things we've heard loud and clear from our clients in the watch community in general is people are fed up with price increases. They were before tariffs were even a glimmer in anyone's eyes. And the tariffs have certainly exacerbated that in the U.S. market. And we do know that some brands are spreading that pain to the rest of the world. And everyone is seeing price increases to maybe to varying extents because of the tariffs. And one of the things I read most often and I do hear from time to time is that, oh, well, you know, the brands are greedy. The brands are doing this. They're using tariffs as an excuse to raise prices. Or, you know, this is terrible for me, but it must be good for the brands because now they're charging more for their watches. And I think what this points out is that higher prices hurt everyone because one of the reasons that brands, to your point are having to cut orders or renegotiate contracts with suppliers is because watches are getting more expensive for everyone. They're getting more expensive to make. They're getting more expensive to sell. The tariffs are a challenge there. And when that happens, you have to look at your costs. You have to rationalize things. And that's bad for the industry when you're cutting orders or you're cutting the margins of your suppliers and they're forced to lay people off. So the idea that rising prices are somehow bad for everyone except the brands, and they're good for the brands, and they're fueling the greed of the brands themselves and the industry itself just, just isn't true. The higher prices hurt everyone. And this is a great example. Couldn't be more so. Speaking of, you know, macroeconomics and what's going on at a kind of a global level, there's definitely a reshuffling happening in terms of where watches are most in demand and where there's growth and where there's weakness. And the three markets for the industry that keep coming up are the US China and this year, India. I just got my copy of my latest copy of Europa Star magazine, and wouldn't you know, the COVID story, not just the COVID story, but most of the magazine itself, is dedicated to and focused on the watch industry in India. And this has been a meme that has been really strong in the watch industry this year. And I think particularly the challenges happening in China. So this is a market that is, you know, once the world's largest market, down 13% year over year in terms of sales. The US obviously having challenges as well. People in the industry have been looking to India. When we were at the gphg, there was even talk on the stage about the growing strength and the importance of India as a watch market. And just to put some numbers to it, why is India getting the attention that it is now? A lot of these growing markets typically get attention, and this is not the first time, thinking more broadly in the last 25 years about the global economy that India has been getting attention for. Its, its growth and its economic strength. But in the watch industry, this is a unique moment in time for India. This is a market that is up about 9% percent year to date. So it is a growth market. And keep in mind the global context around the watch industry is either kind of generally flat, still doing strong. Okay. In the US down everywhere else, particularly in China. Meanwhile, you have a market that's almost up 10%. And the value of watch sales in India right Now is about $1.6 billion. So it's a significant market. This is a major market. And there are industry and analyst projections that by 2033, so in less than 10 years, in about eight years, this will be a $2.8 billion market. Yeah. That is why we're hearing so much about India. Tremendous growth in that market. It's. It's rather remarkable. And to keep an eye on.
- [24:21]
A
Yeah. And I mean, you know, speaking about the pain and pressures that we're experiencing because of the implicit. The implementation of tariffs, a lot of the reason that we believe this is going to change is because of the reduction or removal of tariffs on Swiss goods into India. So last year, in 2024, India signed what's called the India EFTA, the European Free Trade Association Trade Agreement. They did that in March of 2024, and it went into force on October 1st of this year. And what that's going to do, quite, quite the timing. Yeah. Right. And what that's going to do is gradually reduce the extraordinarily high tariffs that have been in place on Swiss Goods all the way down to starting at around 22% and then gradually decreasing to what could end up being 0%, which would be unbelievable for that market because what that, that will make Swiss watches extraordinarily more accessible to people than they were before. Because when you have a punishing tariff, 39% or above, which is what they had, things become really expensive, difficult to do business. All the things we just talked about. When you remove those pressures and you do it gradually with the intent embracing a global and free trade relationship, which is what the Indian government is attempting to do with the European Union plus Switzerland, you're going to hopefully see for them what will be a big market boom. There are of course, and this is way outside the scope of openwork, geopolitical and economic pressures that are going to happen throughout the, throughout this process that will have an impact when a market of over a billion people enters into free trade agreement. Was one of the largest economic powers in the world, the European Union, how that will impact trade amongst other large scale trading partners like China, like the United States. But bottom line, if I were a Swiss watch executive, I would be laser focused on developing the Indian market for all of these reasons and more.
- [26:23]
B
Yeah, it's an interesting story. Certainly a market to keep an eye on, not just for watches, but when you think about everything happening and a lot of the reordering happening in the global economy, regardless, India has a lot of tailwinds supporting it and so watches are going to be an important part of that story, it would seem. Final topic here. I'm throwing this one on the pile, as you like to say. I want to talk about a couple of new releases from a business standpoint and then I want to ask you about, about a new release. I'm going to ask you about your, your favorite new release because there have been a lot of interesting watches from the last month. But before we do, I want to talk about what I'm calling a tale of two cities here in terms of product releases from a purely a business standpoint, which is the Omega Seamaster, Planet O and the Tudor Ranger. I'll cut to the chase here. I think let's take the watches themselves and put them to the side for a second. I just think purely from a product strategy standpoint and a business standpoint, I find the the Planet Ocean reboot, let's call it, fascinating, really interesting, very bold and I think whether the execution is right, I think the intent behind it makes a ton of sense and I'm very supportive of it. It's Risky. And I find the Tudor Ranger utterly, I don't know. And I think for me, again, cutting the chase. I think it further underscores what we're already seeing with tudor, which is some general malaise around the brand. It's a brand that's shockingly down year over year in terms of sales performance. And when I look at a watch like the Ranger, I. It just sort of underscores why for me it just is lacking some of the excitement the brand. The brand had. But I'm curious for your take on. On. On these, on these watches because I find them fascina. Surely from a business standpoint everyone's talked about them from a product standpoint. But what's your take on these two launches?
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A
Yeah, like you, I think the Tudor Rangers this news best. Our friend Tony Traina wrote an entire piece about it. He talked about how, you know, he went over to TUDOR headquarters and like they kept this one under wraps and he went into a whole history on the watch because he is if nothing else, an incredible just archive of knowledge of the history.
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B
I believe he has a beautiful example of a vintage Tudor Ranger. That's what one of his signature watches.
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A
But at the very end of the article he basically is. Or at the end of his newsletter letter which you should all subscribe to because it's fantastic. He basically was like, but you know, I mean in the end it's just a different dial and I would agree.
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B
What do you think about that? 36 millimeter case size.
- [28:54]
A
Okay, cool. Go get yourself a 30. Get vintage. Get a vintage or get a modern explorer. There's tons of 36 millimeter explorers out on the market for 15 to $1,600 more, give or take maybe $2,000 more than the retail of this watch. It's a better watch.
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B
I'd get a Black Bay 36. I don't know. I find. I find the dial design of the. Of the Ranger very, very flat. It sort of misses the mark for me.
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A
I also, I know, I know there's the heritage for it, but I find the handset to just be ridiculous.
- [29:22]
B
But anyway, yeah, I wonder why.
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A
Moving on though.
- [29:26]
B
I've heard so many descriptors of that of that handset, but none of them, none of them actually call the sound of people googling. None of them actually saying what it really looks like regardless.
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A
But the planet Ocean really are going for that explicit tag. I didn't say I don't know. Yeah, so let's talk about the planet Ocean, which is actually interesting. Here's What I love about that watch. So first of all, full disclosure, Gabe and I both love the Planet Ocean line. We've owned various versions of the now immediately previous generation of the Planet Ocean. I think that watch absolutely kills. I'm not going to get into the price thing about how it's like the same price as a sub, blah, blah, blah. But I think the key thing that is so awesome about what they did, same price. It's like $200 difference between a no date sub and this.
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B
I don't know, I think it is.
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A
Like $9,300 for the new po.
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B
Really?
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A
Yeah, the new po is $9,300 on a brace.
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B
The no date sub is over 10 now.
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A
No, no date subs. $9,500 plus tax. Okay, so it is a 200 delta. It's essentially the same price.
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B
All right, all right.
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A
The, the. But the reason I point. The reason I point.
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B
What about a date sub?
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A
Whatever. The reason I point that out, and I think this is important is that if you're going to directly compete with that watch now because previously it was like it was the Challenger, right? It was several thousand dollars.
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B
But isn't it more of a sea dweller Challenger, whereas the 300m is more of the sub?
- [30:47]
A
Okay, sure, I mean, whatever. But the point is like now, because.
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B
What are people really cross shopping?
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A
My point is that like if we're talking from a price anchoring standpoint, this is going head to head. Head to head with a sub. And maybe is it $2,000 more if you want to see Dweller. But the point I'm making is that if you're going to do that, then you gotta, you gotta have a little bit more risk under your belt. And they did that by redesigning the watch that it's not. Not like a sub. Because the thing about the PO42 millimeter in the previous edition is that there was a lot there.
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B
43 and a half.
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A
43 and a half.
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B
Yeah.
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A
I think there was a smaller version too.
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B
There was at one point. So in the first few generations it was around 42. Then in the most recent generation that I think they launched in 2015. Yeah, 42.
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A
My point is from an.
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B
Or smaller.
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A
Yeah. But from an aesthetic standpoint is very similar to a sub. Brushed bracelet, oyster style links, you know, three piece link, rotating ceramic bezel. Like a lot. Like it really was. And I realize I'm describing a dive watch, but like it really did feel more sub.
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B
Like a magnetic movement.
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A
Yeah, it felt way more like a sub than the 300M. Which is kind of its own thing now.
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B
Okay, yes, fair.
- [31:56]
A
Now, by redesigning the case geometry as aggressively as they have by using center polished links, by offering this on an integrated rubber bracelet with no quick change. What the hell, Omega. But put that aside. But putting all of this together.
- [32:09]
B
Oh, there's quick. Oh, no quick change. Yeah, there's micro adjustments.
- [32:13]
A
Sure, sure, sure. But there's no quick change from a rubber strap to a bracelet, which again, what the hell, Omega.
- [32:17]
B
If you're offering that, you might as well.
- [32:18]
A
But put that aside. This watch does not look like a sub. Not remotely. So to me, I'm like, okay, cool. If you want to compete at the same price point, then you got to offer something so different that you can't ab Apple compare it. Right? Because as somebody who sells watches for a living, I know that a deal is cooked as soon as somebody says to me, well, for that money I could get blank. But when you're. But when you're thinking about it in this way, it's like, sure, you could, but it's not an apples to orange comparison. Right. So I think that from a strategic standpoint or product standpoint, you can like this watch, you can not like this watch. Good news about it. It's really polarizing. People love it or they hate it. And that is great because that is exactly, to me what you need for a hit where there's going to be people who just like. The polarization is what helps people make choices. The worst thing in the world is when someone sees a watch and goes, okay, and then just walks away. Yeah.
- [33:12]
B
The one dimension in which it does compete with the sub spiritually is it does veer into that more lu area. From more of a. To your point, the certainly the original planet ocean from 20 years ago was very toolish. I mean, even think about the way it launched around, you know, the James Bond franchise. I mean, it was a rugged watch and this is a much more luxe watch. You know, the ceramic bezel, the polished center links, the facets on the casets on the case and the polishing. And that way it does compete with, with a modern Submariner. I'm wearing a modern Submariner right now. And you know, compared to like a GMT Master or Daytona with center polish links or whatever, it certainly feels a little bit more toolish. But it's really a luxury object. I mean, the, the dial is a glossy dial. The ceramic bezel is blingy. So in, in that sense, spiritually, the, the planet Ocean competes by saying, we're not Trying to be this hardcore tool watch anymore. We're moving into this luxury watch space more exclusively, explicitly. We're planting a flag there. But I think it's a really bold move. You know, if. If you told, hey, Omega is going to. And I've been waiting for a rebooted planet.
- [34:22]
A
We got to get that open, open work merchandise. If you told me a year ago.
- [34:26]
B
Well, if you told me that the. All right, maybe I shouldn't say that so much, but if. Look, if you told me there was a new Planet Ocean coming, I would have told you what I. What my wish list for it was. Because I loved the previous generation Planet Ocean. A little smaller, a little slimmer, compact, lug to lug. But, like, basically, it would have been refinements in the ergonomics of the watch, because I love, loved that formula. I did not see this thing coming.
- [34:51]
A
No.
- [34:51]
B
And I have to give credit to Swatch Group. You know, a lot of people have given Swatch Group a lot of flak this year. Their sales have been down, I think, 14% year over year. They've struggled. I think, since that white dial Speedmaster, people have criticized Omega for not really having much in the way of interesting product launches. And they certainly broke the mold with this one, and they went for it. And. And in a big corporation, a big brand like Omega, and in a big corporation like the Swatch Group, that is really hard to do. So I just want to give kudos to them for really going for it.
- [35:26]
A
Yeah. And before we go, I'm going to do something that I've never done on this podcast before, which is buy a watch. No, I'm going to. I'm going to compliment this watch group, but not for Omega.
- [35:39]
B
Okay, so is this your. Your favorite new release? Release?
- [35:42]
A
No, I actually don't. I actually, aesthetically, I'm not 100% on board with the watch, even though technically it deserves an incredible amount of attention.
- [35:50]
B
All right, fair enough.
- [35:51]
A
But. But what I'm more into is the. The strategy that it implies, and that is the Breguet experimental one for me, Per. I want to be clear, this is a personal taste thing. Like, I think the watch is not 100% my style, but. But what I am seeing them do here, both with this and with the 250 anniversary releases, the GPHG notwithstanding, is that they are beginning to wake up from their slumber for the last decade and actually starting to take some creative risk. Now, Gabe knows this about me. I love Breguet watches. I've owned several modern Breguets over the last 10 years. I'm one of the few people out there that probably loves the modern marine line.
- [36:37]
B
Oh, and you show me what you, you've shown me that I think is so remarkable are a lot of the Neo vintage brigade complicated pieces which are very different from what the brand offers today, by and large, and are so elegant.
- [36:49]
A
But the problem with that brand for so long has been incredible watches with just, I think it's fair to say, terrible brand management. You know, just a total disconnect from the reality of the market, what it wants from that brand and how those watches are priced. Their new CEO does not obviously did not start this. You know, he started last year and I, I, I'm optimistic that he will take what clearly has been in the works for some time. They say that this experimental one has been in the works for a decade. I hope that is true because that would tell me that the Swatch Group has in fact been aware of the fact that the brand has been asleep at the wheel, proverbially speaking, and has been doing the real work work to get it to where it needs to be and to earn the rights and the kudos that it very well deserves when it does excellent work. So I am.
- [37:42]
B
Holy shit, man. I am looking at the. All right, this qualifies as your, as your new release to highlight. Sure. This is, this is a, this is cool.
- [37:51]
A
Yeah, Like I said, not my style aesthetically, but not the point, but really.
- [37:57]
B
Really interesting from a watchmaking standpoint but also aesthetically a departure for the. Absolutely, really cool.
- [38:04]
A
Absolutely. And I think this to me indicates the best possible future for Breguet to step outside of the, you know, the dusty stuff that they've been doing year over year over year again and again and again.
- [38:18]
B
Yeah, I mean the products have been not, look, they're remarkably compelling and well made, but kind of a snooze fest.
- [38:25]
A
Many of them have been, but there have been indications here and there and everywhere of a little bit of risk. And then this one really actually indicates this is cool.
- [38:32]
B
I mean, so what is going on here from a watch making standpoint? I have to ask, I'm looking at photos of it. It's a incredibly beautiful and incredibly well finished open worked watch.
- [38:44]
A
But it's a, it's essentially a tourbillon.
- [38:46]
B
It's a tourbillon.
- [38:47]
A
But, but I think what's so remarkable about it is the, the complete esthetic departure.
- [38:53]
B
Not what I was expecting. This, this looks more to me like Ferdinand Bertude or something.
- [39:01]
A
Yeah, exactly. I mean it's got, it's a, it's way more. It's a much, much. You know, what it ultimately is, honestly, Honestly, it's standing on the heritage, not going back to the heritage. You know what I mean? Like, so much of what Breguet does is about, you know, and this is what I love about the tradition line, you know, or what I love about the subscription piece that won the gphg. You know, in general, those watches harken back to the romantic pocket watches that Al Breguet himself made. But so much of what the brand does is like, keeping one foot on that base and like always going back to that same playbook. Book this. And I mean, yes, I'm aware of the heritage and the connection of the Tourbillon and Breguet, but like, this is not something that Al Breguet would make. Like, there's no universe in which you would have invented anything that looks anything like this.
- [39:50]
B
Yeah.
- [39:50]
A
So what I think that's incredible about that is that they're actually saying, I'm going to look at my, I mean, just look at the case architecture. This is definitively modern watch. So I think what you're looking at here is them saying, we have heritage and we're, we're willing to now to break out of that mold, take that heritage and build new things with it. And that is awesome. So it's the same way that I look at, I realize it's not the same heritage here, but the way I look at Panerai, I'm like, you know, Panerai, wake up, do something.
- [40:17]
B
You know, or credit to Swatch Group here.
- [40:20]
A
Right, exactly. And the point is, like, when you have such a strong design language like a Breguet or a Panerai or an iwc, for example, it can be very difficult to elbow your way out of that cage. IWC we've talked about before has done a great job of busting out of that cage when they can, you know, Panerai. Like, I don't, you know, if they ever decide to like, wake up and realize that there's more to it than what they've been doing, I think they have an opportunity to do something really incredible there for what they stand for. And Breguet, hats off, man. You, you like much respect. This watch indicates that. And I mean, like, let's see what they do now over the next few years. This is a multi hundred thousand doll. See how this trickles down into, you know, their, their, you know, more accessible 20, $30,000 watches. See how this ultimately pushes that Brand forward. And if it does, I think we might have a pretty strong competitor on the market to, you know, that can finally go up against Patek.
- [41:21]
B
Yeah, well, certainly Vacheron.
- [41:23]
A
Yeah, certainly Vacheron.
- [41:24]
B
So I'm going to throw one on the pile here and I'll give you a business angle on it. I thought this would be the watch you would. You would highlight as a. As a, you know, really fascinating and cool new release, which is the Ulysse Nardan Urwerk. You are Freak. The Urfreak. The Earthreak. What a cool watch. What a cool collaboration. What I. A lot has been said about it, but what I think is most interesting about this watch from a business standpoint is we've been fortunate over the years to get to know the guys at Urwerk, including Martin and Felix. And I can tell you, you. Felix is, is a tough cookie. He has. And he is absolutely entitled to his opinions and he has earned them. But he, he's a tough customer. He is hard to impress and he should be. He is an incredible watchmaker, an incredible horological mind. He. He and Martin have built something absolutely bonkers with, with Urwerk that's the envy of really everyone in independent watchmaking, not just from a pure creat, but also from a watchmaking standpoint. And the fact that Felix Baumgartner said y' all want to collaborate with Ulysse Nardan should tell you something about Ulysse Nardin and should tell you something about the importance of the Freak, not just to independent watchmaking, but to watchmaking overall. And I think, you know, what you essentially have here is Felix and Martin, who are some of the most, most creative and accomplished and impressive people in independent watchmaking. Co signing with Ulysse Nardan. That should tell you something about Ulysse Nardan.
- [43:05]
A
Yeah. You know what's cool about that watch? Fundamentally, to me, like, yes, all of that. But when I was shocked that they.
- [43:11]
B
Would do a collaboration with another brand that's not an independent.
- [43:14]
A
Well, but, but, well, un. Is, you know, you know what I mean? Look, when we saw that pro, when we saw that watch for the first time, it shouldn't even watch days. And this is the, this is really, I think the, the indicator of something that's truly successful in a collaboration in general is that it looked 100% like a freak and 100% like an ear work. Yeah, yeah. And, and that to me, you know, it's like, it's, it's awesome. It's like you picked it up, you're like, oh yeah, I set this by rotating the bezel like a freak. And then you had the realization that, wait a minute, I can set this backwards and forwards like a freak, but it's which I would not do with a UR150. You know, that's pretty cool. I can wind it with the case back like a freak. That's pretty cool. The case architecture is undeniably a freak. The funky buckle is undeniably a freak. And the watch itself, with its time telling mechanism is 100% an urwerk. Also, for those of you who've never had the chance to handle this watch, I cannot express to you how wearable this thing is. It's really thin. It's really thin. And I think for a lot of folks out there who have been intimidated by Urwerk for its dimensions, this is a solution for you. It's, it's incredible. And there's only a hundred of them out there. It's not cheap, it's $122,000. But it's a hell of a watch. And I hope if you have the opportunity to go see one, at least that you, that you take it before, before 100 guys snag them up. They are one of the coolest watches I've ever seen.
- [44:44]
B
Yeah, one of the most remarkable watches this year from just a watchmaking and creative standpoint. I mean, it looks, yes, it looks 100% like a freak. It also looks 100% like inner work. It is, Holy smokes. But I think from a business standpoint, I am, I am shocked. But in the most pleasant way. This was, this was also not on my bingo card for 2025.
- [45:08]
A
It wasn't. And I'll say this last point too, before we, before we go split. So I, I, I've always been a huge GP and UN fan. Owned by the same folks, made in the same manufacturer. I'm really, I mean, GP has also been quietly doing some crazy stuff. That, that Three Bridges is a hell.
- [45:26]
B
Of a lot that deserves some props as well.
- [45:28]
A
The new, the new version of the Lado. You and I saw that in Geneva last month. Beautiful new dimensions. Gorgeous, gorgeous, gorgeous watch.
- [45:35]
B
New movement. Yeah, remarkable.
- [45:38]
A
But what I'm interested to see now from both of those brands, it is very clear that their leadership has their head on straight and they're really trying to reinvest and reinvent a lot of that brand or both those brands. And I want to apply the Breguet test to them, which is okay, you guys, you know, you have a couple of things that are Remarkable. Commercially, I'm not talking. Watch me, watch me. It's all great, but like, commercially it's like there's the three bridges, you know, which is on the very, very high end, six figures from GP. There's the Laureato, of course, which is prob. What 99.99% of people know about from GP. And then everything else is kind of like around the edges and most people don't know anything about it. There's no heat around it, et cetera. Same thing with un it's like everybody knows the freak, the freak is on fire. Like people, you know, I see collectors hunting them down. But the rest of the UN line, you know, the marine chronometers, you know, some of their divers, etc. Here in the United States is pretty quiet. So I'm really, really, really curious to see what other risk they will take outside of of what I would say is their normal like tolerance. Like materials, for example, you know, GP has always been very experimental with materials. In the recent day, recent years, I'd like to see them go beyond that into real design, risk taking like the planet Ocean and see where we can go. But if we zoom out at what we're seeing here, you got Omega taking serious design risks, you know, and putting, you know, putting like their chips on the table where they think they should go. Breguet is doing that. UN did this in this collaboration. Let's see where that, that goes. GP is clearly testing the waters to see collector demand. This is good news across the board. This is good news. And if you look at this stuff and you go, yeah, okay, cool, but I don't have a quarter million dollars for it, I would argue. Oh yeah, totally, I hear you. But what I'm challenging the brands to do and what I hope we see in at least intellectually, what I'm challenging the brand is everybody's got a hero watch, a Halo watch, right? The 120, 300, 400, $500,000 watch. What happens have you. But how that trickles down into the, the bread and butter line is ultimately what will lead to the.
- [47:39]
B
Well, not even that. But we've. Look, I was cynical about the GPU and spin off I'm. When it was announced, I viewed it as a financial maneuver and clearly they're serious about watchmaking, which is great to see. So I am happy to have my hat in hand there. But look, I think you should be excited about this kind of risk taking for watches at any price. So spirit, spiritually, what's happening here with GP&UN and Swatch Group should be happening at every price level across every watch. And is particularly important given the overall climate we've talked about in the watch industry, where this is an industry that is stagnant at best in terms of its economic performance or on the decline globally. And this is exactly what the industry needs to shake itself up and to get people excited again and get its mojo back. I think we see saw in the great financial crisis, which certainly had a huge impact on the watch industry. The answer to that was to get more conservative. And this started the cycle of focusing on heritage watches and reissues and things like that and going back to tried and true formulas. And what we're seeing the watch industry do this time is very different. They're focused on risk taking and bringing more value and doing things that excite people and are unexpected. And that is what we, we need, that is encouraging. So why don't we leave it there?
- [49:01]
A
Awesome.
- [49:02]
B
All right, well, thank you for listening. This, of course, is open work. It's a production of Collective Horology. You can find us online@collective horology.com and please get in touch with your questions, your comments, your feedback. We want to hear from you, how you like this new format and we want those questions. Send them in. They really help us a great deal. And of course, you can do that by emailing podcast at collectivephorology.
- [49:26]
A
Com.