Quartz crisis

Based on Wikipedia: Quartz crisis

The Christmas Present That Nearly Killed Swiss Watchmaking

On Christmas Day 1969, a small Japanese company called Seiko quietly released a watch that would devastate one of the oldest and proudest industries in Europe. The Astron, as it was called, looked unremarkable. But inside, where centuries of Swiss tradition demanded intricate gears and delicate springs, there was something entirely new: a tiny vibrating quartz crystal.

Within fifteen years, two-thirds of Swiss watchmakers would be out of work.

What happened next is sometimes called the quartz crisis if you're in Switzerland, or the quartz revolution if you're almost anywhere else. The difference in terminology tells you everything about who won and who lost.

How a Quartz Watch Actually Works

To understand why quartz was so disruptive, you need to understand what it replaced. A traditional mechanical watch is essentially a controlled release of energy. You wind a spring, and that spring slowly unwinds over the course of a day or two, pushing a series of gears that move the hands. The trick—and it's a considerable trick that took centuries to perfect—is making sure the spring releases its energy at exactly the right rate. This is where the escapement comes in, a mechanism that allows the gear train to advance by a tiny, precisely measured amount at regular intervals.

The problem is that mechanical escapements are temperamental. Temperature changes expand and contract the metal parts. Gravity pulls differently depending on how the watch is oriented. Dirt and wear degrade the precision over time. Even the best mechanical watches gain or lose several seconds per day.

A quartz watch works on an entirely different principle. Quartz is piezoelectric, which means that when you apply electricity to a quartz crystal, it vibrates at an incredibly consistent frequency. And the reverse is also true: when you bend a quartz crystal, it generates a tiny electrical charge. This property was discovered by Pierre and Jacques Curie in 1880, but it took nearly a century before anyone figured out how to shrink a quartz oscillator small enough to fit in a wristwatch.

The magic frequency turned out to be 32,768 vibrations per second. This number wasn't chosen randomly—it's a power of two, specifically two raised to the fifteenth power, which makes it easy for simple electronic circuits to divide down into one pulse per second. A quartz watch simply counts these vibrations and moves the hands accordingly.

The accuracy difference is staggering. While a fine mechanical watch might be accurate to within five seconds per day, a basic quartz watch is accurate to within fifteen seconds per month. And quartz watches are cheaper to manufacture, require almost no maintenance, and are far more resistant to shock and temperature changes.

The Comfortable Monopoly

To understand why Switzerland was so vulnerable to this technological shift, you have to understand what the Swiss watch industry looked like in the 1960s. It was, by any measure, extraordinarily successful. Swiss companies controlled half of the world's watch market and an even larger share of the profits, since they dominated the high end.

This success was built on a peculiar historical accident. During World War Two, Switzerland remained neutral, which meant its watch factories kept humming along making consumer timepieces while the rest of the industrialized world converted to military production. When the war ended, Swiss manufacturers faced essentially no competition. The American watch industry had been hollowed out. The German industry was in ruins. Japan was rebuilding from devastation.

By the 1950s, Swiss watchmaking had become intertwined with Swiss national identity. The country was famous for three things: banking, chocolate, and watches. Towns in the Jura mountains had been making timepieces for generations. Families passed down specialized skills—one town might be known for its escapements, another for its balance wheels, a third for its cases. The industry supported not just watchmakers but toolmakers, metallurgists, jewelers, and a vast network of suppliers.

This deep specialization was both a strength and a weakness. It made Swiss mechanical watches the finest in the world. But it also made the industry resistant to change. When you've spent your entire life mastering the art of adjusting a hairspring to compensate for temperature variations, you don't want to hear that a cheap crystal renders your expertise irrelevant.

The Race Nobody Expected

The irony is that Swiss companies were among the pioneers of quartz technology. In 1962, about twenty Swiss manufacturers formed the Centre Electronique Horloger in the city of Neuchâtel, specifically to develop a Swiss quartz wristwatch. They knew the technology was coming. They were determined to be first.

Meanwhile, on the other side of the world, Seiko was working on the same problem. The 1964 Tokyo Olympics provided an unexpected proving ground. Seiko supplied a portable quartz clock called the Crystal Chronometer as a backup timer for marathon events. It worked flawlessly. More importantly, it demonstrated that quartz timekeeping could be made reliable and portable.

By 1967, both the Swiss consortium and Seiko had working prototypes of quartz wristwatches. They submitted them to the Neuchâtel Observatory competition, a prestigious annual event where watchmakers showed off their most accurate timepieces. The quartz prototypes crushed the mechanical competition so thoroughly that the organizers eventually stopped holding the competition altogether.

The race to market was incredibly close. Seiko won by just a few months, releasing the Astron on Christmas Day 1969. The Swiss Beta 21 movement, developed by the consortium and sold to various brands, arrived at the Basel trade fair in early 1970. Both worked. Both were expensive—the Astron cost about as much as a small car. But Seiko did something that the Swiss did not.

Seiko made its key patents publicly available.

The Decision That Changed Everything

This single decision—to share the technology rather than hoard it—shaped the entire future of the watch industry. Seiko's reasoning was strategic: if quartz became an open standard, it would spread faster, and Seiko's manufacturing expertise would give it an advantage in the long run. The Swiss consortium, by contrast, tried to maintain control over its technology, charging licensing fees and limiting production.

The results were predictable. By the mid-1970s, quartz watches were being manufactured all over the world. American semiconductor companies like Texas Instruments and National Semiconductor jumped in, leveraging their expertise in microelectronics from military and space programs. Hong Kong became a manufacturing powerhouse. By 1978, Hong Kong was exporting more electronic watches than any other country in the world.

The Swiss, meanwhile, watched their market share collapse. The psychology of the industry worked against adaptation. When you're on top, it's hard to believe that everything you know is about to become obsolete. Many Swiss manufacturers convinced themselves that quartz was a fad, that consumers would always prefer the craftsmanship of a mechanical watch. Some added quartz to their product lines reluctantly, almost apologetically, as if offering a lesser product.

By 1978, quartz watches had overtaken mechanical watches in total sales. The Swiss industry was in free fall.

The Bloodletting

The statistics from this period are brutal. In 1970, Switzerland had 1,600 watch manufacturers employing 90,000 workers. By 1983, only 600 manufacturers remained, and employment had crashed to around 28,000. That's more than two-thirds of the industry gone in just over a decade.

Famous brands that had existed for generations went bankrupt. Others survived only as names, their assets sold to foreign competitors. The towns of the Jura, which had built their entire economies around watchmaking, faced devastation.

The crisis wasn't just economic. It was psychological. Switzerland had defined itself in part through its watchmaking prowess. The precision, the craftsmanship, the centuries of accumulated knowledge—all of this was supposed to matter. The idea that mass-produced electronics from Japan and Hong Kong could simply sweep it all away was traumatic.

The American watch industry fared even worse, though since it had already been declining since the 1950s, there was less to lose. By the time quartz arrived, most traditional American watch companies were already gone or owned by foreign interests. Hamilton, one of the great American watch names, had introduced the world's first digital watch—the Pulsar—in 1970, but the company couldn't survive the brutal price competition that followed. It sold its brand to the Swiss, of all people, in the 1970s. Bulova, the company that had pioneered electronic watches with the tuning-fork-powered Accutron in 1960, held on longer but eventually sold to Japanese-owned Citizen in 2008.

The Plastic Savior

The Swiss watch industry was saved by a product that horrified traditionalists: a cheap, colorful, disposable watch sealed in a plastic case.

The Swatch—the name was a contraction of "Swiss watch"—launched in 1983, the darkest hour of the crisis. It was designed from the ground up to be manufactured cheaply and automatically. Where a traditional mechanical watch might have 91 moving parts, the Swatch had just 51. The case was welded shut; if it broke, you threw it away and bought another one.

Everything about the Swatch was designed to be the opposite of traditional Swiss watchmaking. It was fashion, not heirloom. It was playful, not serious. It came in wild colors and limited-edition designs that encouraged collectors to buy multiple watches. And crucially, it was affordable—competing directly with the Asian manufacturers on price while trading on Swiss cachet.

The Swatch was a massive success. More than 2.5 million sold in the first two years. But perhaps more importantly, the Swatch was part of a corporate restructuring that saved the broader industry. In 1983, the two largest Swiss watch groups—ASUAG and SSIH—merged in a last-ditch attempt to survive. This combined entity eventually became the Swatch Group, which today is the world's largest watch manufacturer.

The Swatch Group strategy was clever. Use the profits from cheap, mass-market Swatch watches to sustain the high-end mechanical brands like Omega and Longines. Over time, the group acquired an astonishing collection of prestigious names: Breguet, Blancpain, Harry Winston, Tissot, and ironically, Hamilton, the American brand that had introduced the first digital watch before going bankrupt.

The Luxury Escape Hatch

The Swatch Group wasn't the only survivor. Several Swiss manufacturers escaped the crisis by retreating upmarket—far upmarket—into territory where quartz technology's advantages didn't matter as much.

Patek Philippe, Audemars Piguet, Vacheron Constantin, and Rolex all survived by repositioning mechanical watches as luxury goods rather than timekeeping instruments. The argument went something like this: yes, a quartz watch keeps better time. But a mechanical watch is a work of art. It's a tradition. It's something you pass down to your children.

This repositioning required some cognitive gymnastics. For centuries, the entire point of watchmaking innovation had been accuracy. Better escapements, better materials, better manufacturing—all in service of keeping more precise time. Now, suddenly, accuracy didn't matter anymore. What mattered was craftsmanship for its own sake.

Remarkably, it worked. High-end mechanical watches became status symbols, worn by executives and celebrities who could easily afford perfect timekeeping but chose to strap a less accurate device to their wrists precisely because it was expensive and complicated. A Patek Philippe today can cost more than a house, and some of the most coveted models have waiting lists measured in years.

The Revolution Continues

The quartz revolution itself didn't stand still. The original quartz watches had analog displays—traditional watch hands driven by electric motors. But the same electronic technology that enabled quartz timekeeping also enabled digital displays. First came LED watches, with their glowing red digits that drained batteries quickly. Then liquid crystal displays, which used almost no power and could run for years on a single battery.

The shift to digital displays enabled features that would have been impossible in mechanical or even analog quartz watches. Chronographs that could measure hundredths of a second. Alarms and timers. Multiple time zones. Water resistance to depths that would crush a mechanical movement. Japanese brands like Casio built empires on digital watches packed with features at prices that would have been unthinkable a generation earlier.

And now the watch industry faces another technological disruption: the smartwatch. When Apple launched the Apple Watch in 2015, it became the world's most successful watch almost immediately, at least by unit sales. Swiss watchmakers, perhaps remembering the trauma of the 1970s, have been more proactive this time. Several have launched their own smartwatches. Others have doubled down on the luxury positioning, arguing that a smartwatch will be obsolete in five years while a fine mechanical watch will still be running in fifty.

Whether this strategy will work better the second time around remains to be seen. The Apple Watch already outsells the entire Swiss watch industry combined. But then again, that was true of quartz watches by the late 1970s, and the Swiss industry not only survived but found a way to thrive at the high end.

The Deeper Lesson

The quartz crisis is often cited as a classic case study in disruption—an incumbent industry, comfortable and dominant, failing to adapt to new technology until it was nearly too late. And that framing isn't wrong. The Swiss did have the technology. They did develop quartz movements. They simply couldn't bring themselves to cannibalize their existing business.

But there's another way to read the story. The Swiss industry did, eventually, adapt. It found niches—the luxury market, the fashion market—where the new technology's advantages didn't matter as much. It consolidated, became more efficient, and survived. Today, Switzerland exports more watches by value than any other country in the world.

The lesson isn't that incumbents always lose. It's that survival requires being willing to become something different. The Swiss watch industry of today is nothing like the Swiss watch industry of 1969. It makes different products, for different customers, with different value propositions. But it still exists. It still employs tens of thousands of people. And it still matters.

The names on the dials are the same. Everything else has changed.