ETA, a subsidiary of the Swatch Group, strategically decided to stop selling movements to outside brands primarily to prioritize supplying its own extensive portfolio of watch brands. This move was a deliberate effort to strengthen the Swatch Group's internal manufacturing capabilities and enhance the competitive edge of its numerous brands.
The Strategic Shift: A Dominant Player's Decision
The initiative to curtail external movement sales was announced in 2002 by the late Nicolas G. Hayek, then the visionary head of the Swatch Group. At that time, ETA held a commanding position in the industry, having cornered roughly 75 percent of the movement-making market. The plan was to gradually cease providing movements to certain outside brands by 2006.
This decision marked a significant turning point for the watch industry, as it forced many independent watch brands that relied on ETA movements to seek alternative suppliers or develop their own in-house production capabilities.
Key Motivations Behind ETA's Decision
The Swatch Group's rationale for this bold move was multifaceted:
- Vertical Integration: The primary goal was to ensure that the Swatch Group's own brands, which include powerhouses like Omega, Longines, Tissot, and Hamilton, had guaranteed access to ETA's high-quality and reliable movements. This reduced their dependency on external supply chains and allowed for greater control over production and innovation.
- Strengthening Internal Brands: By limiting external sales, ETA's resources could be fully dedicated to meeting the demands of Swatch Group's internal brands, fostering their growth and differentiating them in a competitive market.
- Market Dominance Leverage: With such a high market share, Swatch Group recognized the power it held. This move was a strategic play to leverage that dominance, potentially creating barriers for competitors and solidifying its position across the entire watch value chain.
Timeline of Key Events
| Year | Event | Significance |
|---|---|---|
| 2002 | Nicolas G. Hayek announces plan for ETA to cease external movement sales. | Marks the public declaration of the strategic shift. |
| 2006 | Target year for the cessation of certain external movement supplies. | Intended implementation period for the new policy. |
This strategic pivot by ETA had profound ripple effects across the watchmaking landscape, prompting a new era of movement innovation and diversification among independent brands.
