Swatch to launch Swiss smartwatch operating system by 2018

By Silke Koltrowitz

BIEL, Switzerland (Reuters) - Swatch Group is developing a Swiss-made operating system as it seeks to offer a smaller, more flexible alternative to the dominant systems which connect items such as smartwatches to the internet, its chief executive said on Thursday.

The world's biggest watchmaker has been sceptical about smartwatches, which use systems like Google's Android Wear, Samsung's Tizen OS and Apple's WatchOS to connect to the internet, and has so far launched watches with limited connected features under its Tissot and Swatch brands.

CCS Insight expects the market for smart wearables to almost double to 185 million units worth $16.9 billion by 2021.

Nick Hayek said the biggest problems facing competitors' smartwatches related to energy consumption and privacy. Swatch Group, whose brands include Omega, said last month it was working with Swiss research institute CSEM to launch an "ecosystem" for connected objects by the end of 2018.

Swatch said this would offer absolute data protection and ultra-low energy consumption and would not need regular updates.

"I don't want to become the industry standard for smartwatches," Nick Hayek said on Thursday, adding it would be dangerous if everybody depended on just one or two dominant operating systems.

"But in Switzerland we have a lot of expertise when it comes to creating something that is smaller, consumes much less energy, is independent and more cost-efficient and can go into little objects," he said.

Swatch had many requests from small U.S. startups looking for flexible open-source systems and would serve these customers while also using the system in its own watches, he said.

Ben Wood, an analyst with CCS Insight, said there were dangers in Swatch trying to build its own system, adding that it would be hard to compete with Google, Samsung and Apple, which had more resources in this area.

"Swatch may be able to develop its own software platform, but attracting developers to get access to the most popular apps needs an operating system with scale. Just look at how BlackBerry ended up abandoning its own software," Wood said.

But if Swatch was able to offer people something unique it might be able to break into the market, Francisco Jeronimo at IDC said, adding that this was a "a gigantic task".

However, users had not yet locked in to a specific interface in what is a still new segment, therefore offering an opportunity for Swatch, Jeronimo said.

(Editing by Alexander Smith)