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The Watch Appreciation Thread (Reviews and Photos of Men's Timepieces by Rolex, Patek Philippe, Brei

Discussion in 'Classic Menswear' started by gdl203, May 20, 2007.

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  1. Dino944

    Dino944 Distinguished Member

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    From the moment I saw photos of your Padeck Nawdeelust, I could tell you know how to roll. But I have my connections too...a guy on 42 Street selling Padecks out of a trench coat [​IMG]
    Best explanation I've seen regarding the new IWC pricing plan! I love it!!!
     


  2. Dino944

    Dino944 Distinguished Member

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    Not a biker, but with an older sports car, I understand the unexpected issues or pit stops that go with having an older vehicle.

    Yes, the GMT I had years ago served me well for many years and the Explorer 2 has given me 12 years of great service. The Explorer II means a lot to me as it was the first watch my wife ever gave me, she was making a lot less money back then so I know it took her some serious saving to purchase it, and I appreciate the thought she put into it. She knew I liked watches and we were going to be traveling to Monte Carlo for our honeymoon. So she thought it would be cool to get me a watch that could tell time in 2 timezones. She felt the steel bezel was a little more conservative than the blue/red GMT so I might be more easily able to wear it to work with business clothes. It could certainly tell a lot of stories if it could talk, it attended our wedding, honeymoon, every vacation, and pretty much any sporting activity that I've worn a watch for...so its certainy lived up to its reputation as being rugged and able to take whatever I can dish out!
     


  3. no frills

    no frills Distinguished Member

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    There is no greater testament to the beauty and purpose of a timepiece as its having become part of your life, tested by time!
     


  4. Dino944

    Dino944 Distinguished Member

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    Like anything the value is whatever a person is willing to pay. Watches aren't the only item besides cars or homes that people negotiate the prices. If you shop at certain jewelry stores you can get a discount on diamonds, necklaces, or watches (and not simply private label stuff). I've gotten discounts on Chopard necklaces, Chopard earings, Mikimoto earings and necklaces, just to name a few items.

    If I were asking for a customized item I would not seek a discount. However, if its a serially produced watch why not inquire about a discount? I'm a customer that day...the choice is theirs, maybe they make a sale if they take something off the price...if not I have to decide to I really like it for that amount of money. If so, I'll buy it...if not I might go and purchase something from another brand that I like just as much. I bought my RO Jumbo at the best price I could find from an AD I liked and felt comfortable with...there is no AD nearby that carries it. Could I have gotten it for less and hunted around for longer...maybe? Maybe I wouldn't have gotten a better price and that AD would have sold the 1 piece he expected before the end of the year. Maybe there would have been a price increase before I got it, thereby negating a greater percentage of discount. In the end, based on the quality of the watch, the dealer I was working with, and not feeling comfortable spending a lot of money with a gray dealer, I went with the AD that I thought treated me the best and gave me a reasonable deal. I called a well known place in NYC, the guy was a bit pompous, and made it sound like he was doing me a favor. He didn;'t want to commit to a price until I told him unless he will discount the watch, I might as well buy it at the boutique and get the extended discount. Even then he said he wouldn't give me a final price until I told him what the best price any other ADs gave me. I felt thats not really fair, to let some putz match the price when he would not have given me that price on his own. He gave me a mediocre price and kept telling me he could maybe to a tiny bit better but that I was getting their fantastic customer service that is second to none. I said in dealing with a watch in this price range all of the ADs I dealt with were really nice to me, so I really couldn't figure out what he was offering me that I wasn't getting with anyone else. He couldn't actually articulate any difference I would get in dealing with him versus another dealer. In the end I went with a slightly smaller but well respected AD and the guy was much nicer.

    There is never going to be a change in price structure that will create what you call an accurate reflection of value. We all have different perceptions of value, so you can't come up with a number to satisfy everyone. I suppose companies could try to lower their prices significantly in addition to cutting the number of ADs. With less competition, and lower prices fewer watches would sit in stock in ADs' show cases and AD wouldn't be trying to sell slower moving items out the back door to gray dealers. Also with lower pricing there might be less inventory and ability for gray dealers to undercut AD pricing or even to obtain certain models. However, it would have to be on a world wide scale and I don't see that happening.

    In the end lots of people like the negotiating aspect of buying a watch. Some people are better at it than others, or they have dealers that are more desperate to make a sale than in other locations.

    As for the pricing of most brands, its gotten out of control and IMHO shows a bit of greed. But as long as people keep buying and showing no resistance to price, prices will continue to rise.



    As for enacting pricing structure that more accurately reflects the value of a watch...thats just not possible.
     


  5. Dino944

    Dino944 Distinguished Member

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    +1

    I couldn't agree more!
     


  6. Hayward

    Hayward Distinguished Member

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    Kangaroo tail today.

    [​IMG]
     


  7. Newcomer

    Newcomer Distinguished Member

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    I definitely agree with most of what you said. And I guess a little bit of competition never hurt anyone, especially when the customer can make an informed decision based on various factors, i.e., price, service, relationship with the dealer, etc. I agree that there is never going to be a change in price structure that will create what I termed "an accurate reflection of value." I guess what I said was a bit of a misnomer. Let me phrase it in the alternative. I wish there was a change in price structure such that there was not such a huge discrepancy between price and value. Perhaps some examples would illustrate better what I am attempting to say, because I feel like I may have been a bit cryptic (I blame it on the 'hurriedness' of my last post). I also think that the below analysis is better applied to the 'mid-level' luxury tier, perhaps the $4,000 - $10,000 range.

    I think what I find perturbing is the huge discrepancy in what people pay. When one person walks out of an AD paying $3,500 for a watch with an MSRP of $5,000, and I walked out paying $4,500, I cannot help but feel that I was being swindled. I cannot help but wonder, "is $3,500 the lowest? Could the AD have been pushed to $3,000?" I find it a little bit confusing I guess. That is one aspect of Rolex's pricing structure that I really appreciate. I like the fact that most Rolex ADs do not discount. When I think of the Submariner, I automatically think of a watch that is $7,000. And honestly, I think it is appropriately valued at $7,000. I know that Rolex tends to get bashed for being overpriced, but I find satisfaction in knowing that I paid the same amount as everyone else did.

    In contrast, I think Omega has some issues in this regard. The Speedmaster retails at about $4,500, and I bought mine for far less than $3,500 from a certain AD. That same AD had the new 8500 models for less than $4,000 retail. What does that say about how much the watch is actually worth, if both the AD, and the Manufacturer can profit off of an item that has already been discounted by ~25 percent? I am not saying that this pricing strategy is good, or bad... I am just saying that I find it a bit disconcerting.

    For the sake of example, lets take IWC. The new Ingenieur is going to be retailing for, I believe, $6,600. This is a watch with a ETA 2892 movement, and has half the antimagnetic fortitude as its predecessor. I cannot help but wonder what is going into the watch that makes it $6,600. And yes, I know the standard refrain, veblen good, luxury market, etc. However, Cartier has come out with the Tank Solo XL with an ETA movement for $3,500, and in my opinion, is a brand with as great of a provenance as IWC. The JLC Master Control comes in at around $6,800, and features a wonderfully finished in-house movement, and is superbly finished. I guess I am just confused?

    I think certain brands have begun to enact pricing structures that, although they do not accurately reflect the value of the watch, are certainly on their way to better reflecting the value of the watch. Brands like JLC, GO, and even Cartier, have really surprised me as of late. I think some of the upper tier are also 'fairly' priced. I wish that there was a little more transparency, less price variance (or more brand control), and less price gouging. As you noted... some of this is just plain greed. And I feel like it is not a good thing when your customers start to develop the perception of your brand as greedy. The problem, I guess, is that most of these brands are just not catering to 'WIS.'
     


  8. mreister

    mreister Active Member

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    Hi all,

    Thought I'd join in on the conversation finally, after reading (I think) the entirety of this thread and enjoying it immensely. I particularly enjoyed the Rolex discussion that was had over the last 25 pages or so. My own Rolex purchase was preceded by my moving through all 3 stages of thinking about Rolexes as mentioned by the forbes article posted here a while back. In the end, prompted by a desire to own a watch with dual time zone functionality and the feeling that I could wear it anywhere, I ended up with an 116710. Obligatory wrist shots below (please excuse the crappy phone pics):

    [​IMG]

    [​IMG]


    On another note, I wanted to weigh in on the brand exclusive boutique business model that's been discussed recently. I apologize in advance for the length and detail of this post.

    Quote: Apropos, your thoughts come closest to matching my own feelings on the topic. I can't help but think that, while greater control over their brands is nice to have, the real motivation for moving to this business model is vertical integration - a desire to capture more of the value chain.

    When considering why vertical integration would be attractive to manufacturers, I found it helpful to build out a pretty basic financial model for the industry on a what I'll call a status quo basis (non-integrated stand-alone manufacturers, ADs only as a distribution model) and also a model showing the changes that would take place given a shift to a more modern model (mixed distribution model - some ADs and some wholly-owned boutiques). Google docs with the details / relevant assumptions here. A few notes:
    1. The model is very sensitive to the input assumptions (as all models are)
    2. I did about an hour worth of research when putting this model together - it's not entirely robust. Would be happy to accept any guidance from the more seasoned / knowledgeable members here and update the model to incorporate better ideas if there's interest.
    3. The model as constructed is built to basically assume (almost) no synergies from the transition to a boutique distribution model. For example, I assumed that the transition didn't have any impact on number of units sold, no impact on ASPs / GM%s, and had largely the same const structure as an AD. I don't think this represents the most likely case, but I built it this way for ease of use - sensitivity tables have been included so you can see the impact changing a particular input would have, and you're more than welcome to tinker with the model - variables you can change are in blue. Please do not change anything in black font, as they represent calculations, and changing those will screw up the model.
    4. This whole model was done in excel. I'm sharing it in google docs for the sake of convenience, but I'm happy to send it to you in excel format if the google doc gets messed up or so you can adjust the sensitivity tables, if you're interested.

    A few high-level quantitative conclusions from the model:
    • Under these assumptions, ADs look like pretty crappy businesses. This makes intuitive sense to me - the largest value add in the system clearly lays with the manufacturers. Their creations are complicated products of artistic design and highly technical engineering. The ADs on the other hand, are merely resellers.
    • As such, the transition to the boutique distribution model is highly dilutive to the manufacturers' operating margins, and in fact is dilutive on a Operating Profit dollars basis.
    • Operating margin is not very sensitive to either the number of services performed per year or the margin received on these services. This is likely because I'm significantly underestimating the baseline number of services / year. On the other hand, the model is very sensitive to changes in units / year, ASP, rent / square foot and square feet per boutique.
    • I think the likely case for this transition is something like this: 200 incremental services / year; 10 incremental units / year / boutique; $50/ square foot in rent. Inputting these assumptions shows that the transition is additive on an operating profit basis, but dilutes their margins somewhat. As this improves their operating profit, it's also better on a cash flow basis, and the companies will drive significant additional shareholder value.

    Finally, some qualitative conclusions:
    • This transition dramatically alters the manufacturers' cost structure - moving away from a primarily variable cost structure and towards something that is much more fixed. While this change is inherently risky, it also gives them much more operating leverage. Any incremental units / boutique or growth in ASP will dramatically improve operating margin, and this is reflected in the model.
    • Willingness to take these extra risks indicates to me that the manufacturers view their demand as being relatively stable. This is less intuitive, considering the degree to which macroeconomic cycles can impact their businesses. A couple of mitigating factors:
    1. The consolidation present in the market for watches. Swatch group, Richemont and Rolex make up more than 43% of the entire watch market (2011 figures), and that kind of scale breeds stability (and pricing power!)
    2. The brands owned by the 3 companies mentioned above skew towards the higher end, and demand for luxury goods and commodity goods are least affected by economic downturns

    On an unrelated note, many of you have previously noted the dramatic increase in prices for watches over the last 10 years, in particular. Apropos, you even asked what was driving these price increases. To answer your question, I'd point you to the similar rise in commodity prices over the last 10 years (this link is a bit old, but explains the phenomenon well enough to make my point). I believe that the single biggest growth driver for both of these markets is the explosion of wealth in emerging markets (China and India, in particular). While many of us have wondered if these price increases can continue, keep in mind that even if China grows at the slowest rate that they've grown in the last 20 years, their GDP will double in ~10 years. Just some food for thought.

    Thanks for reading all this. Sorry it nearly turned into a novel!
     


  9. Newcomer

    Newcomer Distinguished Member

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    Wow, arguably one of the best first posts I have ever read on any forum, ever. I look forward to your contributions, welcome! I will parse your post more in depth tomorrow, when I am not so sleepy.
     


  10. in stitches

    in stitches Kung Joo Moderator

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    +1
     


  11. mreister

    mreister Active Member

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    I've decided that it makes more sense for me to lock the google doc as read only, since I can't monitor it for changes, and just post the link to download the file here. Hopefully this works for everyone - I haven't used dropbox in years, so let's hope I didn't screw up posting the link...let me know if you want this in some other format besides excel. I'll see what I can do in that case.
     


  12. Belligero

    Belligero Distinguished Member

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    I'm glad to hear that you enjoyed the article; I found that it was unusually perceptive, especially for something from a general-interest publication. I've been enjoying the discussion here quite a bit as well; it's always a pleasure to learn something new, and the signal-to-noise ratio here is among the best I've seen when it comes to watches in general. There are a few good reads here about their new facility in Bienne that, as an industrial systems engineer, I find a bit fascinating. Their production techniques are perhaps not the most romantic, but I have to admire their pursuit of absolute manufacturing precision. The logic of choosing ultra-fine-tolerance machining when it's appropriate, and employing people when the human touch is most suited — such as the delicate tasks of hairspring curving, balance wheel truing, positional adjustment and component assembly — is difficult to fault. In this sense their design and manufacturing ethos is far more German than traditional Swiss, which makes sense as seem to have carried on their born-in-Germany founder's watchmaking philosophy. Even head Patek Philippe honcho Thierry Stern mentioned in a Hodinkee interview:
    —hat tip to No Frills I wasn't too surprised to read that, as the companies make fundamentally different watches that complement each other well. Their relationship is more symbiotic than competitive, with Patek's products offering beautiful hands-on craftsmanship and little to no overlap with Rolex's essentially-perfected mass production. http://www.timezone.com/2012/12/13/the-rolex-factory-in-bienne-by-james-dowling/ http://www.watchtime.com/featured/rolex-bienne/ Their bespoke dust-free temperature-controlled machining modules are a bit mind-blowing, as are the details of their hairspring production. For a company that I had dismissed, prior to meeting a top watchmaker in 2009, as a mere marketing machine with nothing special behind the curtains, I'm rather stunned at how wrong I was. [​IMG] Great choice on the new GMT II — it's all you need, and it's the best do-anything watch currently produced, IMHO — and thanks for the engaging post. [​IMG]
     
    Last edited: Feb 19, 2013


  13. apropos

    apropos Distinguished Member

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    Just in case anyone is wondering, the actual reason for the triple date wheel is so that when the minute hand obscures the date at the 15min mark, you can still tell the date.

    IMO that said, its still the laziest solution ever to an inconsequential problem. Sort of sums up the current state of IWC when you think about it.
     
    Last edited: Feb 19, 2013


  14. Belligero

    Belligero Distinguished Member

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    That's the excuse they use for it, at least. The reality is even worse than laziness, and it's an example of true design illiteracy.

    That lame-o cutout is there for the sole reason that they're trying to imitate the look of an aircraft altimeter, which — besides being laughably gimmicky — completely goes against the first rule of true pilot's watch design, which is "keep it simple and uncluttered".

    [​IMG]

    The cutout on a real altimeter is necessary for legibility and allows vital information that can increase or decrease at a variable rate to be interpreted more quickly while flying. It's essential to the instrument's function.

    The date shown on the altimeter-wannabe XVII's ETA 2892 movement does not even remotely constitute safety-critical information, plus it's a freaking static display. The extra numbers in this case add nothing except messiness and the opportunity for confusion. This is fundamentally incompetent "gee-whiz" ornamentation that has absolutely no place on a real pilot's watch. Regrettable, as IWC once made mostly no-BS stuff across the range, and now they're going further off the rails with each new design.

    Robert Bringhurst's words on typography as it relates to bicycles come to mind:

    Amen, brother.
     
    Last edited: Feb 19, 2013


  15. NonServiam

    NonServiam Senior Member

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    Good reads on the last couple of pages! :D

    A touch of red today ... Old pic.

    [​IMG]
     


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