The Quartz Watch
Quartz is a piezoelectric material that will vibrate at a resonance frequency in the presence of an electric field. By properly controlling quartz's use in electrical circuits the rate of oscillation can be closely regulated. The greater the number of oscillations the greater the accuracy that can be obtained by the watch movement.
In 1928 the first quartz clock was made in the U.S. by Horton and Marrison and the first quartz clock was used by the Greenwich Observatory in 1939. The problem for wrist watches was miniaturization, it was not until 40 years after Horton and Marrison that the first models were available for sale in 1969. The size of the electrical circuits used for quartz clocks could not be miniaturized for use in wrist watches until the 1960s with the manufacture of small integrated circuits. The cost was high, $3,000 (1994 dollars) and the watches were bulky, ugly, had a low battery life, and were less reliable than mechanical watches. Reliability was a problem because quartz crystals would breakdown and the resonant frequency in the circuit would shift, causing the accuracy to decrease substantially after about one year. Low reliability caused J.C. Penny to have a return rate of 40% on some models. In 1960 the electronic watch with a tuning fork was introduced in the Bulova Accutron. The idea for this watch actually came from a Swiss engineer named, Max Hetzel, but the Swiss watch industry was not interested in his idea so this product champion came to the U.S. and received support from Bulova. After the market success of the Accutron, in 1965 the Swiss watch industry invested over $2.5M in R&D for the "Beta 21" project sponsored by the major Swiss watch makers to help physicists at the Neuchatel Centre Electronique Horloger (CEH) make a quartz wrist watch movement that operated at 8192 Hertz. A prototype was completed in 1967 and later marketed by Omega in 1970 as the "Electroquartz f 8192 Hz".
It is common to read that those inside an industry do not understand the potential of a new competing technology. Therefore it is not surprising for Landes to conclude that; "With this new technology, watch making was really a new industry, and it was not altogether surprising to see the field invaded by firms that had never produced timepieces before". The Swiss thought that the quartz watch was a fad after all, "what did electronics companies know about watches". How did the U.S. and Japanese respond so quickly to establish market share in this new industry? The answer is that quartz watches were an electronics industry product and the Japanese and U.S. were already the leaders in electronics manufacturing. As EMI experienced with the introduction of the CT Scanner there would soon be stiff competition. The Japanese and U.S. already had electronics manufacturing operations this was the required complementary asset. Tradition Japanese watchmakers, Seiko and Citizen, were soon followed by new electronics entrants Sharp, Richo, and Casio. Hamilton was the first U.S. maker to go with the quartz movement in the Pulsar digital watch, they were followed by Timex and U.S. electronics firms; Texas Instruments, Optel, Intel, Hughes, and Fairchild. Some watch manufacturers teamed with experts in electronics manufacturing and technologies. Electro-Data was joined with Hamilton and Statek was brought in by Seiko. Statek had developed a photochemical process for quartz crystals that Seiko wanted to incorporate into their manufacturing process. Seiko put their first quartz watch, the Quartz Astron 35SQ, for sale in 1969. There were a number of related technology improvements in the 1970s that contributed to increased production and lower costs. There was a sixty percent decrease in quartz circuit energy consumption and a corresponding increase in battery life from one to five years. Movement width decreased in size from five millimeters to one millimeter. The size decrease was important, because consumers placed a high value on thin watches. Process improvements and sales increases led to an astonishing prices drop of two to three percent of original prices. The Swiss responded as predicted by literature by trying to make the mechanical models better and cheaper. Still, only about two and one half percent of sales went to research and development in Switzerland, and two thirds of that went to improvement of mechanical technology while only one third went to quartz technologies. This shows that the Swiss were spending most of their funds at the end of the mechanical S-curve. One author noted that "In the mid-1970s the Swiss were shut out of the market for budget-priced watches by a wave of electronic models from the U.S., Japan, and Hong Kong." The control of the world watch market had now shifted from the historic leader to a rising giant in Asia.