AI is giving software its quartz moment | axiacore

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On Christmas Day in 1969, Seiko released a watch that looked nothing like the beginning of an industrial collapse.<br>The Quartz Astron 35SQ came in an eighteen-karat gold case and cost ¥450,000, more than many popular cars in Japan at the time. Its development team had produced only 20 watches by December.<br>This was not a cheap watch for the masses. It was an expensive technological demonstration.<br>Inside it, however, was a completely different way to tell time.<br>Instead of relying on a carefully assembled system of springs, wheels, jewels, and escapements, the Astron used a battery, an integrated circuit, a small motor, and a quartz crystal vibrating 8,192 times per second.<br>It was accurate to within five seconds per month, about 100 times more accurate than a typical mechanical watch of the period.<br>The first Astron did not look disruptive because people were looking at the product rather than the technology beneath it.<br>It was expensive. It was difficult to manufacture. It did not yet threaten an industry that had spent centuries perfecting mechanical watchmaking.<br>But quartz was not competing on the same production curve.<br>In 1945, Switzerland produced approximately 19 million of the world’s 21.5 million watches. That production was distributed across roughly 2,500 companies, 90% of which employed fewer than 50 people.<br>The industry depended on specialized workshops, skilled labor, apprenticeships, coordination, and knowledge accumulated over generations.<br>Quartz replaced much of that system with electronics.<br>Once manufacturers had invested in the necessary machinery, they could produce watches with fewer components, less assembly knowledge, lower labor requirements, and dramatically lower marginal costs.<br>Quartz watch prices eventually fell by roughly one thousand times. What started at the price of a car became something that could be sold in a convenience store.<br>A cheaper production method does not simply lower prices. It rewrites the industry map.<br>Quartz turned precision machinery into mass-market electronics. For the first time, watch manufacturing had the economics of a technology business operating inside an artisan market.<br>High fixed costs. Low variable costs. Economies of scale. Operating leverage.<br>Once the curve started moving, the transformation happened quickly.<br>By the end of the 1970s, quartz watches were cheaper and more accurate than mechanical ones. In most situations, the mechanical watch had become functionally obsolete.<br>The functional market went to quartz.<br>The effect on Switzerland was devastating. Between 1970 and 1985, the number of Swiss watch manufacturers fell from 1,618 to 634. Employment collapsed from more than 90,000 people to approximately 33,000.<br>Quartz did not eliminate watches. It separated the function of telling time from the business of watchmaking.<br>Mechanical watches survived by becoming something else.<br>They became objects of craftsmanship, scarcity, identity, heritage, and status. The fact that a mechanical watch was more complicated, less accurate, more expensive, and labor-intensive no longer counted as a weakness.<br>Those characteristics became exactly the reason to buy one.<br>Decades later, mechanical watches accounted for only 37 percent of Swiss watch exports by unit volume but more than 85 percent of their value.<br>Switzerland lost the mass market and captured the premium one (probably by accident).<br>Not every Swiss company understood what was happening.<br>Omega entered the 1970s as one of the most important watch brands in the world. Its watches had reached the moon (I'm wearing that one). It sponsored the Olympics. As late as 1977, it remained the third largest watch brand behind Seiko and Timex.<br>Then it panicked.<br>Omega launched too many models, moved heavily into quartz, expanded across price points, licensed its brand, and tried to compete with the new manufacturers on their terms.<br>It attempted to install a new technology within an organization designed for a completely different economic model.<br>Quartz manufacturing required another culture, cost structure, workforce, and operating model. A mechanical watch company and a quartz company could both produce objects that told time while having almost nothing else in common.<br>Rolex chose another path.<br>It did not ignore quartz. Rolex invested heavily in the technology and produced the Oysterquartz in limited quantities. It preserved its ability to follow the market if necessary.<br>But it did not attempt to beat Japanese manufacturers at producing the cheapest and most accurate watch.<br>Instead, Rolex leaned into what quartz could not commoditize: consistency, engineering, scarcity, history, distribution, brand, and control over the customer experience.<br>It stopped competing primarily on the watch's accuracy and strengthened the meaning of owning one .<br>This is the part of the story the software industry should be studying.<br>Software has always had unusual economics....