In recent years, technological advances have been a challenge for countless classic industries. Most have tried-or are still trying-to turn the challenge into an opportunity, taking advantage of new developments to renew the brio of their business. But sometimes, the disruptive forces end up overflowing the adaptation capacities of the traditional industry, condemning it to a progressive loss of relevance.

This lugubrious vision has been hovering over the years for the traditional watchmaker's business. The emergence of Apple in the universe of smartwatches or smart watches with the launch of Apple Watch, in September 2014, represented the necessary impetus for devices in which companies such as Samsung or Motorola already worked. Since then, the rising trend of smart watches has been crossed with the loss of strength of the traditional industry, giving rise to the most pessimistic theories.

A pessimism that has left a deep impression on the parquet. Since the end of 2013, the US watch manufacturer Fossil has seen more than 80% of its value disappear, while Switzerland's Swatch has suffered losses of over 40%. Even groups with a more diversified business have received in their quotes the impact of the crisis of the traditional clock. Thus, the Japanese Citizen Watch falls about 20% in the last four years, while Japan's Seiko and Swiss Richemont (owner of Cartier) fall more than 13%.

The drop in exports of Swiss watches, which accumulate more than two years down, to reach levels of 2011, is the most significant reflection of the challenge facing the sector. Because the situation is not better for manufacturers in other regions. The Japanese bank Nomura accompanies, almost without exception, its reports on the traditional Japanese watchmakers of the warning that "the deceleration of the external demand and the weak movements of the prices have created unfavorable business conditions for the watch industry".

This vision contrasts with that of the smart watch universe, where sales soared in 2015 by more than 350%, according to data from Strategy Analytics. It can be said that the Apple Watch was the spark that the smartwatch industry needed to start gaining prominence. And that despite the fact that Apple's device was, in its beginnings, something like the ugly duckling within the apple family. It did not fulfill the forecasts, it did not contribute almost any new element and, in general, it went unnoticed before the general opinion. The most faithful to the brand did wear it on their wrists, but their numbers were poor.

That is why the Cupertino army got down to work and in the last Apple Event, last September, they took advantage of the spotlights of the presentation of the iPhone 7 to unveil the second generation of the smart watch. Lower price, new features and a design less focused on sports and sales began to rise.

Only in the last quarter of the year, according to data from Strategy Analytics, Apple placed more than five million watches on the market. The figure, in the global computation of the year 2016, touched the 12 million thanks to that strong impulse of the winter period.

"The demand for the new Apple Watch has been surprisingly strong during the Christmas holidays," says Cliff Raskind, an analyst at the American firm. Not in vain, the year 2016 has been the best for the sector of smart watches, with 21.1 million units dispatched. The figures surpassed the year 2015, although the increase in sales has barely exceeded 1%.

In any case, it is clear that since the middle of last year the industry is experiencing a rebound. "There are signs of recovery, although there are still some barriers to overcome," says Raskind.

In his words there is a veiled criticism of the two most powerful manufacturers: Apple and Samsung. The North American company, which has not completely abandoned its focus on functionalities related to health and sports, "has to improve in the manufacture of sensors" to measure this type of activity, according to Raskind. Similarly, Samsung must "improve their prices and introduce significant improvements."

The South Korean giant put on the market at the end of 2016 its latest device, the Gear S3. In its first hours in South Korea it did manage to meet the forecasts, with a sales volume of around 2,500 units dispatched every hour. The effervescence of those early bars, however, soon relaxed. The reason must be sought in its price: the normal is to find it in the environment of 400 euros.

The two giants of the world of telephony have transferred their domain to the terrain of smartwatches. Apple closed the year 2016 with a market share of 55%, while Samsung was left with a modest 11.5%. Between both, in any case, dominate a third of sales worldwide.

Among those figures highlights how the American firm has been gaining ground as the year progressed. In the first quarter of its fiscal year 2017, which corresponds to the last three months of 2016, Apple took a market share close to 80%. That, at the most important sales peak of the year, is an important milestone in the industry.

The rest of the market players have a minor relevance, as is the case of Huawei. The Asian firm, firmly established in the second position in the smartphone market in Spain, is showing itself as an alternative to the two colossi thanks to a very traditional line.

The appearance of the Shenzhen company models have a classic cut and imitate the appearance of traditional watches, but then incorporate technological details. It is true that they are high-end devices and are not available to all pockets, so Huawei will still have to work to beat, for example, Fitbit.

To cope with these new trends in the industry, traditional watchmakers have not hesitated to enter this same path. For example, the prestigious brand TAG Heuer, of the company LVMH, presented at the end of 2015 its first smart watch, with the collaboration of Google and Intel.

One of the most active in this field has been Fossil. The US manufacturer made significant investments at the end of 2015 to enter the smartwatch market. His bet, although applauded from various areas, has not managed to stop the bleeding suffered by the company on the stock market.

On the contrary, its latest results, presented on February 15, were welcomed with a collapse of its quotation close to 15%. Among other reasons, analysts have alleged the fall in margins that have sponsored their smart watches, which also have not managed to compensate with a considerable volume of sales.

Many experts wonder if the sector is prepared to compete in this field with technology giants such as Apple or Samsung. Investment in R & D by Swiss watchmakers was cut in half between 2003 and 2014, according to the book When corporatism leads to corporate governance failure. The case of the Swiss watch industry, written by Isabelle Schluep Campo and Philipp Aerni.

However, the ailments of the watch industry are far from limited to the competition of smartwatch. In fact, in a recent study by Deloitte, only 21% of the sector managers surveyed pointed to the smart watch as the main risk to their business.

From this same study another data stands out. 82% of executives are pessimistic about the perspectives of the sector. This black panorama would be propitiated, beyond by the new competition, by the fall of the sales in an essential market for the sector as the Asian.

It is estimated that more than half of the Swiss watches - which account for 57% of the world market according to Vontobel - are destined for Hong Kong, China and Japan, markets that have experienced in recent years a remarkable decrease in demand. The deceleration of these economies has coincided also with other factors that have played against the demand for luxury watches, the fundamental leg of the business.

From Vontobel Bank point out the anti-corruption campaign launched by the Chinese authorities, which has discouraged the consumption of luxurious ornaments, and the reduction of travel of Chinese citizens. In this last sense, the attacks that Europe has suffered, which have reduced the number of Asian tourists are also mentioned by various experts as one of the keys to the fall in sales.

All this accumulation of problems reached the watch industry with its guard down. After a few years of vertiginous growth of sales between 2010 and 2013, encouraged by the high Chinese demand, which fostered very ambitious expectations, the sector hit its head in 2014 with a stagnation of business that contracted since the second half of 2015

At that time, the sector encountered high levels of production that resulted in a striking increase in inventories. The most paradigmatic case is that of Swatch, which has seen the value of its watches grow in stock at almost 50% of its equity value, compared to 30% when it was only a decade ago. "These high inventories link a large amount of capital, generate high logistics costs, run risks of obsolescence and are a clear sign that the company has a problem on the sales side," said Schluep Campo and Aerni.

However, the sector could be starting to see the light at the end of the tunnel. "We believe that the worst has been left behind", indicate in this line the analysts of Vontobel, who nevertheless warn that a recovery in sales, foreseeable in 2017, would be limited.

In any case, this perspective has been enough for the market, fueled by the lower pessimism around the Chinese economy, to bet on the recovery of the sector. Since last summer, the actions of Swatch and Richemont have experienced comebacks in the environment of 40%, which make up their punishment of recent years.

Investors thus show their confidence that the deterioration of the watchmaking business could be close to reversing. In addition, some measures of the major manufacturers have managed to improve their situation, through job cuts, cost containment and, to a large extent, price reduction. Thus, for example, the Federation of the Swiss Watch Industry, highlighted in its report last December that the incipient improvement in sales was largely concentrated in the segment of parts with lower prices.

This, the expectation of recovery that begins to glimpse the market could be exaggerated. As Citi comments in a report on Swatch there is a high "uncertainty about the future profile of revenue growth and the potential recovery of margins, as well as structural challenges (production overcapacity, continued disruption in Hong Kong, the largest market and most profitable of the Swiss watch industry, deflation of prices, threat of smartwatches) ".

Too many loose ends in the future of a sector accustomed to having controlled to the smallest fraction of time