In the Era of Smart Watches, Casio Bets on G-Shock

Almost 90% of the company’s revenue comes from traditional Japanese line of watches

Tokyo-Clumsy? Maybe. Nerd stuff? Surely. However, for three decades the line of digital G-Shock Watches, Casio Computer, dominated a small but very lucrative market.

The niche of technological watches is attracting the interest of some of the biggest names in the technology industry. Apple patented the name “iWatch” in several countries last year, which led the sector to speculate whether the company would be working in a wristwatch that could connect to the phone. Samsung unveiled this week a clock able to make calls, display games and send emails.

In July, Sony introduced a new version of your Smartwatch clock at Watchtutorials, able to communicate with smartphones and which allows users to play and access Facebook directly. In addition, a number of startups such as Pebble, is offering watches that promise to redefine what we put on her wrists.

Here are some historical models of the G-Shock line

“Suddenly everybody found a pulse,” said Kazuo Kashio, the Chief Executive of Casio, 84 years old, at the company’s headquarters in Tokyo. “We know for a long time that the pulse is a valuable terrain. We are prepared. ”

The high interest in smart accessories is shaking the industry of digital clocks and making room for high-tech personnel in an industry that was asleep. In the process, well established digital watches manufacturers like Casio discover they need to compete with new competitors.

Cameras in fall

However, this is nothing new for the Casio, a company with annual sales of 3.096 billion dollars, which also manufactures compact cameras, musical instruments and calculators. For example, the introduction of the smartphone, which features best cameras with each new generation, brought down the market for compact cameras.

The Minolta abandoned the cameras in 2006, selling its technology to Sony. This year, Olympus and Fujifilm have stated that they would not do basic models after the fall in sales. Even heavyweights like Canon and Nikon have recorded a drop in sales of point-and-shoot models.

Exports of digital cameras fell 43% in the first half of 2013, compared to last year, according to the Association of cameras and Imaging Products.

Casio also suffered. Last year the company had no profits, but analysts say that your focus on thin, inexpensive cameras means that the company will continue to lose market. This makes the market even more important enterprise.

Watches stand

Sales of digital watches correspond to 85% of operating profit from Casio, approximately 206 million dollars. However, in a report published earlier this year, Credit Suisse analysts claim that the advantage would become more and more companies to focus on connectivity, interfaces and applications to the user.

More than that, analysts have said the emerging role of the smartphone as a hub that connects Smart Watches giving a clear advantage to Apple and Google, which dominate the market for smartphones.

“Technologies are evolving rapidly appliances clad limited, single-function and difficult to connect, to what we believe to be connected and intelligent devices,” he said.

The market for this type of technology – including smart watches, sports, tennis monitors and headphones-can increase tenfold, reaching 50 billion dollars in the next two or three years, according to the report.

The idea of an advanced digital clock that functions as a computer is not necessarily new. In the movies, James Bond wore watches that had LED screens, tracking devices, microphones, video monitors and even a mini-printer for secret messages sent from London, not to mention lasers, Geiger counters and hooks to climb.

Eternal promise

But, in real life, the success of smart watches still have been limited.

The Citizen, Casio and other Japanese manufacturers have developed clocks with Calculator in the late 1970, but they never caught the real thing. Casio quickly emerged as one of the largest manufacturers of digital watches, adding dictionaries, blood pressure monitors, touch screens and controls for gestures in the late 1980.

However, after low sales of many of these models-Kashio believes that the company was ahead of your time, your attention back to Casio watches waterproof and shock-resistant G-Shock line.

The G-Shock won fans thanks to retro style, low price, durability, the niche of technophiles and appearance in movies like “mission impossible” and “men in black”.

Other watch manufacturers also faced difficulties. The Fossil collaborated with Sony Ericsson, Microsoft and Palm to develop high-tech watches, including, in 2005, a personal organizer that came with a small pen.

In 2004, Microsoft introduced the Spot watch, that displayed news weather information and the stock market by means of radio waves. The Swatch has partnered with Microsoft to create the Paparazzi. Since then, both companies have left the industry in light of the bad results.

“Until now, the watch manufacturers have not yet found your raison d’ être”, said Kuninori, Vice President of technology consultant ROA Holdings, based in Tokyo. “If Apple come up with a revolutionary Smart Watch, with a beautiful and easy-to-use interface, this could all change.”

Casio continues to sell new products aggressively. Last year it created a watch that uses Bluetooth to allow users to see the incoming calls and messages. Currently, the company is working on a series of new models, including one that allows runners to post details about your internet routes, Kashio said.

The advantages of G-Shock

Casio believes he has an advantage, since wear devices such as watches, which can hit the wall or dropped into water, require much more strength and durability than technology companies are used to offer. Casio executives claim that another advantage is the time duration of the batteries of their watches, which reaches two years for each small lithium battery; the competitive models require a recharge after a few days of use. Experts agree who the time duration of the batteries can be important because users aren’t used to reload frequently watches.

“Casio did great at anticipating what the market wants,” said Serkan Toto, an independent technology analyst in Tokyo. “But the company will be in trouble if Apple or Samsung among the market with more features, designs and best operating systems”.

The Casio does not came out of nowhere. Founded by four Kashio brothers on the ashes of the second world war, she is one of the few companies of electronic products aimed at the consumer who managed to resist the commoditization wave that ended with so many competitors.

The profit margins are on the 20% in digital watches G-shock, Baby-G and others cause envy in the industry.

More recently, the fall in the value of the yen helped the company. Morgan Stanley analysts expect MUFG gross profit from Casio grow approximately of 30% this year, reaching 16.9 billion yen, thanks to good sales of the G-Shock.

The founding brothers-the two who are still alive are still in charge of the company – are already part of Japanese business folk. The oldest, Toshio, was the guru of family, the second eldest, Tadao, was behind many of the inventions, including the first fully electric calculators. The third brother, Kazuo, salesperson is stripped, and Yukio, the youngest, is an engineer and is in charge of production.

In an interview, Yukio Kashio said the company has already won other battles in the past. In the years 1960 and 1970, about 40 Japanese companies vied for what they call in the country of “war of the calculators”. But the Casio took all of the market, the less your archrival Sharp.

“At that time everything was simpler,” said Kashio. “Still, I think there is no one more passionate about timing and numbers as we are”.