In this special commentary feature, we connect with Mr. Fabio ​Anderaos ​de Araujo, a.k.a “The Mechanical Watch” to talk about what else but mechanical watch movements, specifically the in-house variety. In response to a previous Europa Star magazine article on the importance of making movements in-house, The Mechanical Watch breaks down the issue (and also our article), in his most recent commentary. See what he has to say on the matter and join the debate over on Facebook and Twitter.

This article by Europa Star addresses a very interesting theme, because it calls attention to the future of small and independent watch brands.

The majority of the opinions given by the selected watchmakers in the article simply reflect the image that the watch brand wants to transmit to the public. Ideas like competence, differentiation and the high investments to produce in-house calibers are all referenced by the brands. One exception was Jerôme DeWitt, who emphasised a specific market aspect, that is, the strong competition from the large groups.

In-house DeWitt Cal DW8046

I would like to comment briefly the importance of in-house movements by separating the watch brands in three price groups: the luxury range, the in-between luxury and middle range, and the middle price range. Initially, we have to keep in mind that only a small part of the public knows the meaning of an “in-house caliber” and its bearing on the retail price of a watch. If we include the technicalities of a mechanical movement, independent of the question of whether it is a Valjoux 7750 or a specific in-house caliber, such universe is drastically reduced.

In the luxury or high-end segment, the higher the retail price the higher the importance of having an in-house mechanical movement. This is because the value of the case material (e.g. platinum, gold and high-tech ceramics) and the number of complications are not sufficient to explain the high retail price charged for a watch (of course, excluding watches with diamonds and other jewels). Customers pay more for true competence and tradition, like the great French wines from the Pauillac and Pomerol communes.

In the last ten years, a few independent and small watch brands appeared to be “surfing on the tourbillon wave”. They used the largely known conventional tourbillon device in order to justify the high price of their watches, although their mechanical movements were not true in-house calibers. Again, cases made of a precious metal supported the arguments for the high retail prices.

In-house Omega Cal 8501

Mechanical movements used by some watch brands that are classified between the middle price range and the luxury segment are usually not in-house calibers, but neither are they common ones. Such movements are produced by independent manufacturers based on demand. The business risk in this segment is higher because the consumer may expect more from the product in order to justify the higher retail price. Otherwise they might prefer to buy a watch at a lower price point.

In this segment, the COSC certification is not a good enough argument for setting a higher retail price for a watch that has a common mechanical movement. How much does the COSC charge to certify a watch? I believe it depends on the number of movements to be certified. Rolex, Omega, Mido and few others, for example, pay a lower unit price for COSC certification due to the huge quantity of movements they have certified on a regular basis.

Last but not least, watch brands whose target consumer is in the middle price range focus on communicating to the public that the mechanical movement used in their watches is simple and reliable, because the retail price is the relevant variable for the consumer.

In-house Seiko Cal 7S36

In the extreme of this group we have the Seiko 5 collection. What explains the long survival of such a watch collection, which uses the robust bi-directional automatic 7S26 movement (in A, B or C grade)? The collection is still produced and sold with a retail price no higher than US$ 150. At that price point, it is hardly a middle range product. But such a caliber is still a real in-house caliber, which has a low price point as a result of a mass production. So it seems that in-house movements and mass production can go hand-in-hand, after all.

Fabio ​Anderaos ​de Araujo

And for more insights on the watch industry direct from its HQ in Brazil, be sure to check out: