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Remember Swatch? The must-have colourful plastic watches of the 80s and 90s? They are back in the news, with their new plan to produce their own smartwatch operating system.

Swatch plans to develop its own operating system as the Swiss watchmaker seeks to combine smart technology with the country’s expertise in making timepieces and miniaturisation, chief executive Nick Hayek has said.

Mr Hayek added that he wanted to avoid relying on Apple’s iOS and Google’s Android and provide a "Swiss" alternative offering stronger data protection and ultra-low energy consumption.

This new plan has caused all sorts of consternation around the Internet, but I was disposed to ignore it - until now. I just received this week's Monday Note, by the usually reliable Jean-Louis Gassée.

M. Gassée makes some initially good points about the complexity of operating systems, the immaturity of the smartwatch market, and the short timescales involved. Swatch intends to ship actual products by the end of 2018, which is barely any time at all when it comes to developing and shipping an entirely new physical product at mass-market scale. However, I do wonder whether he is falling into the same trap that he accuses Hayek and Swatch of falling into.

… in 2013, Hayek fils publicly pooh-poohed smart watches:
"Personally, I don’t believe it’s the next revolution… Replacing an iPhone with an interactive terminal on your wrist is difficult. You can’t have an immense display."

I tend to agree with Hayek, as it happens; the "terminal on the wrist" is pretty much a side show. The one stand-out use case for smart watches¹ right now appears to be sensors and fitness. If that's not compelling, then there is very little else to attract you to smartwatches, even if you are a committed technophile like me. For myself, after wearing a Jawbone Up! for a year or two, I determined that I was not making use of the data that were gathered. The activity co-processor in my iPhone is ample for my limited needs.

What Is A Smartwatch?

The key point, however, is that Swatch have not announced an actual smart watch, but rather "an ecosystem for connected objects". M. Gassée even calls out some previous IoT form within CSEM, Swatch's partner in this venture, which recently produced the world's smallest Bluetooth chip.

The case against the wisdom of the Swatch project - the complexity of OS development and maintenance, the need for a developer ecosystem, and so on - assumes that Swatch are contemplating a direct rival for Apple's watchOS and Google Gear. What if that's not what's going on at all?

What if Swatch is going back to its roots, and making something simple and undemanding, but with the potential to be ubiquitous? The ecosystem for a smartwatch is now widespread: everyone has a smartphone, NFC is everywhere, from payment terminals to subway turnstiles. What if Swatch just intends to piggyback on that by embedding a few small and cheap sensors in its watches, without even having a screen at all?

Now that would be a Swatch move. In fact, it's such a Swatch move that they've done it before, with their Snow Pass line:

Its ski watch stores ski pass information and has an antenna that communicates with a scanner at the fast-track ski lift entrance. One swipe of the wrist and you're through.

That description sounds a lot like ApplePay to me - or really any NFC system. Add some pretty basic sensors, and you've got 80% of the smartwatch functionality that people actually use for 20% of the price.

Seen through this lens, the focus on privacy and security makes sense. It has been said that "the S in IoT stands for 'security'", and we could certainly all use an IoT player that focuses on that missing S. If the sensors themselves are small and simple enough, they would not need frequent updates and patches, as there would be nothing to exploit. The companion smartphone app would be the brains of the operation and gateway to all the data gathered, and could be updated as frequently as necessary, without needing to touch the sensors on the watch.

So What Is Swatch Really Up To?

As to why Swatch would even be interested in entering into such a project, remember that these days Swatch is part of a group that sprawls across 70 different brands, most far more up-scale (albeit less profitable) than lowly Swatch with its plastic watches. Think Omega, Breguet, Glashütte, Longines, or Blancpain. The major threat to those kinds of watches is not any single other watch; most watch lovers own several different mechanical watches, and choose one or another to wear for each day, activity, or occasion. In my own small way, I own three mechanical watches (and two quartz), for instance.

For a while now, and accelerating since the release of the iPhone, the competition for watches was - no watch at all. Why bother to wear a watch, the thinking went, when your smartphone can tell the time much more accurately? But now, insidiously, the competition is a watch again - but it is the last watch its owners will ever wear. Once you start really using an Apple Watch, you don't want to take it off, lest you miss out on all those activities being measured. Circles will go unfilled if you wear your Rolex to dinner.

But what if every watch you buy, at least from The Swatch Group, gives you the same measurements and can maintain continuity through the app on your phone? What if all of your watches can also let you on the subway, pay for your groceries, and so on? Other players such as Breitling and Montblanc have also been looking into this, but I think Swatch has a better chance, if only because they start from scale.

Now we are back to the comfortable (and profitable) status quo ante for the Swiss watch industry, in which watch aficionados own several different watches which they mix and match, but with each one part of the same connected experience.

Analogies are dangerous things. The last few years have conditioned us to watch out for the "PC guys are not just going to figure this out"-type statements from incumbents about to be disrupted. What if this time, the arrow points the other way? What if Swatch has finally figured out a way for the traditional watch industry to fight back against the ugly, unclassy interloper?

The greatest benefit of the Internet is the democratisation of technology. Development of customised high-tech solutions is no longer required for success, as ubiquitous commodity technology makes it easy to bring new product offerings to market.

Together with the ongoing move from one-time to recurring purchases, this process of commoditisation moves the basis of the competition to the customer experience. For most companies, the potential lifetime value of a new customer is now many times the profit from their initial purchase. This hoped-for future revenue makes it imperative to control the customer's experience at every point.

As an illustration, let us consider two scenarios involving outsourcing of products that are literally right in front of their users for substantial parts of the day.

Google Takes Its Eye Off the Watch

The first is Google and Android's answer to the Apple Watch, Android Wear. As is (usually) their way, Google have not released their own smartwatch product. Instead, they have released the Android Wear software platform, and left it to their manufacturing partners to build the actual physical products.

Results have been less than entirely positive:

If Android Wear is to be taken as seriously as the Apple Watch, we actually need an Android version of the Apple Watch. And these LG watches simply aren't up to the task.

Lacking the sort of singular focus and vertical integration between hardware and software that Apple brings to bear, these watches fail to persuade, and not by a little:

I think Google and LG missed the mark on every level with the Style, and on the basis of features alone that it is simply a bad product.

So is the answer simply to follow Apple's every move?

It is certainly true Google have shown with their Nexus and Pixel phones just how much better a first-party Android phone can be, and it is tempting to extrapolate that success to a first-party Google Watch. However, smartwatches are still very much a developing category, and it is not at all clear whether they can go beyond the current fitness-focused market. In fact, I would not be surprised to see a contraction in the size of the overall smartwatch market. Many people who bought a first-generation device out of curiosity and general technophilia may well opt not to replace that device.

Apple Displays Rare Clumsiness

In that case, let us look at an example outside the smartwatch market - and one where the fumble was Apple's.

Ever since Retina displays became standard first on MacBooks¹ and then on iMacs, Mac users have clamoured for a large external display from Apple, to replace the non-Retina Apple Thundebolt Display that still graces many desks. Bandwidth constraints meant that this was not easy to do until a new generation of hardware came to market, but Apple fans were disappointed when, instead of their long-awaited Apple Retina 5K Display, they were recommended to buy a pretty generic-looking offering from LG.

Insult was added to injury when it became known that the monitor was extremely sensitive to interference, and in fact became unusable if placed anywhere near a wifi router:

the hardware can become unusable when located within 2 meters of a router.

Two metres is not actually that close; it's over six feet, if you're not comfortable with metric units. Many home office setups would struggle with that constraint - I know mine would.

Many have pointed out that one of the reasons for preferring expensive Apple solutions is that they are known to be not only beautifully designed, but obsessively over-engineered. It beggars belief that perfectionist, nit-picking Apple would have let a product to market with such a basic flaw - and yet, today, if an Apple fan spends a few thousand dollars on a new MacBook Pro and a monitor in an Apple Store, they will end up looking at a generic-looking LG monitor all day - if, that is, they can use the display at all.

Google and Apple both ceded control of a vitally important part of the customer experience to a third party, and both are now paying the price in terms of dissatisfied users. There are lessons here that also apply outside of manufacturing and product development.

Many companies, for instance, outsource functions that are seen as ancillary to third parties. A frequent candidate for these arrangements is support - but to view support this way is a mistake. It is a critical component of the user experience, and all the more so because it is typically encountered at times of difficulty. A positive support experience can turn a customer into a long-term fan, while a negative one can put them off for good.

Anecdata Time

A long time ago and far far away, I did a stint in technical support. During my time there, my employer initiated a contract with a big overseas outsourcing firm. The objective was to add a "tier zero" level of support, which could deal with routine queries - the ones where the answer was a polite invitation to Read The Fine Manual, basically - and escalate "real" issues to the in-house support team.

The performance of the outsourcer was so bad that my employer paid a termination fee to end the contract early, after less than one year. Without going into the specifics, the problem was that the support experience was so awful that it was putting off our customers. Given that we sold mainly into the large enterprise space, where there is a relatively limited number of customers in the first place, and that we aimed to cross-sell our integrated products to existing customers, a sudden increase in the number of unhappy customers was a potential disaster.

We went back to answering the RTFM queries ourselves, customer sat went back up into the green, and everyone was happy - well, except for the outsourcer, presumably. The company had taken back control of an important interface with its customers.

Interface to Differentiate

There are only a few of these interfaces and touch-points where a company has an opportunity to interact with its customers. Each interaction is an opportunity to differentiate against the competition, which is why it is so vitally important to make these interactions as streamlined and pleasant as possible.

This requirement is doubly important for companies who sell subscription offerings, as they are even more vulnerable to customer flight. In traditional software sales, the worst that can happen is that you lose the 20% (or whatever) maintenance, as well as a cross-sell or up-sell opportunity that may or may not materialise. A cancelled subscription leaves you with nothing.

A customer who buys an Android Wear smartwatch and has a bad experience will not remember that the watch was manufactured by LG; they will remember that their Android Wear device was not satisfactory. In the same way, someone who spends their day looking at an LG monitor running full-screen third-party applications - say, Microsoft Word - will be more open to considering a non-Apple laptop, or not fighting so hard to get a MacBook from work next time around. Both companies ceded control of their interface with their customers.

Usually companies are very eager to copy Apple and Google's every move. This is one situation where instead there is an opportunity to learn from their mistakes. Interfaces with customers are not costs to be trimmed; instead, they can be a point of differentiation. Treat them as such.

Image by Austin Neill via Unsplash

It’s long been obvious that other phone¹ manufacturers largely follow Apple’s lead. Phones used to look like all sorts of things, but now they all look like iPhones.

This is part of Apple’s modus operandi: they are never the first into a particular field, but they do tend to refine it, if not define it outright. They didn’t make the first personal computer, but they did make the one that influenced all the others. They didn’t make the first MP3 player, but can you even name one apart from the iPod? In the same way, they didn’t make the first mobile phone or even the first smartphone - but they refined both form and function in a way that instantly made everything else obsolete.

Some manufacturers of Android handsets at least make an effort to differentiate themselves, but most are pretty shameless, even copying advertising and packaging. However, most of the time they do at least go to the effort of tracing over Apple’s designs onto their own paper. Now Samsung has just given up, and submitted a patent application (for removable watch bands) which actually includes Apple’s own drawings of an Apple Watch!

This sort of thing goes on all the time - seriously, there are entire blogs just dedicated to documenting instances of Samsung shamelessly copying Apple.

Things have finally got to the point that a group of eminent designers has filed an amicus curiae brief documenting and explaining the negative impacts of this practice.

Well done to them, and I hope it helps. I don’t wish Samsung any ill, but the Android world needs its own identity. By all means copy ideas from Apple - every desktop GUI around (and many that are dead) follow conventions first set by Apple in the original Lisa and Macintosh². The execution of the idea needs to be original, though.

I’m not saying there need to be gimmicks; if that sort of thing were useful, we’d all be using Windows phones, with those Live Tiles and dockable apps. I just wish there were more recognition that Apple makes choices for reasons, and others may wish to make different choices for different reasons.

Sending out this Facebook campaign on the day after Apple announced the Watch is a brave¹ decision, indeed.

Let me know how that works out for you, Huawei.