Thoughts On Pricing And The Accutron 314

History, mystery, and inflation

The recently announced relaunch of the Accutron Spaceview, which will be available this fall from Accutron as the Accutron 214, has raised a number of interesting questions. (If you’re interested in how the watch works, I covered some of the technical details for The 1916 Company and I will go so far as to say I think I didn’t do a bad job of it).

The first is less a question than an observation, which is that Accutron is now a separate brand from Bulova, which seems an odd decision as “Bulova” goes with “Accutron” like butter goes with popcorn, but that’s just how it is, at least for now. The second question, is what Accutron had to do to make the watch. Accutron like Bulova is a brand owned by Citizen Group, which has immense technical resources, and certainly the experience necessary in electronics and mechanics to undertake the project (the electronics part at least is straightforward as the entire Accutron circuit consists of just a few parts: a battery, circuit board, one transistor, one resistor, one capacitor, and the drive and feedback coils). However, modern technical capabilities notwithstanding there are highly specialized components in the Accutron, which are not supported by the larger industrial base for quartz and mechanical watches which Citizen Group undoubtedly possesses.

In particular, the tuning fork, permanent magnets, coils, the tiny index and pawl fingers and their jewels, and the index wheel itself with its microscopic teeth, are to put it mildly not off-the-shelf components, nor are any of them obtainable as stock parts from any supplier. That a technology is obsolete doesn’t necessarily mean it’s easy to duplicate and history is full of examples. Damascus steel is one example; what is called Damascus steel today is a form of pattern welded steel, but wootz steel, which was used to make historical Damascus blades, is not the same thing and even today, with considerable effort being made to reproduce it, no one has yet succeeded. Greek fire is another example and in watchmaking, we need only look at inventions like the remontoir, which has been rendered completely obsolete even in mechanical horology, but which remains rare, expensive, and difficult to make.

One big unanswered question is how much Citizen was able to draw on its own history of making tuning fork movements – Citizen made Accutron tuning fork movements under license from Bulova, starting in 1970, although there are some significant differences between the historic 214/218 Accutron calibers, and the new 314. (The new 314, to pick just one example, uses silicon for the pawl and index jewels; Accutron inventor Max Hetzel said in a 1999 interview, that only one man knew the secret of making the original ruby jewels and he took that secret with him when he died by suicide, many years before the interview took place).

With these considerations in mind, we can look at pricing. In 1960, when Accutron was first announced, the prices quoted in contemporary ads from Bulova ranged from $175 to $2500, which is a rather astonishing difference. The $2500 model as it turns out, was the Accutron model 703, which had a platinum case and an extremely intricate platinum mesh integrated bracelet. Adjust for inflation, an entry level Accutron would cost about $1900 today and the 703 would cost about $27,000 – from what I’ve read very few 703s were made, probably less than 10.

The 314 was announced a few weeks ago, at $5990 in steel and $31,500 in gold. For a historical perspective, in 1960 gold was about $35 an ounce, while platinum was much more expensive, at around $150-200 per ounce depending on the day. Today of course, gold has significantly outstripped platinum in cost; gold currently trades at over $3400 an ounce, with platinum at $1200 per ounce (roughly). In 1960 therefore, platinum was almost six times as expensive as gold; today the ratio is reversed, with gold almost three times as costly as platinum. However, the pricing of gold vs. platinum watches and jewelry is driven not just by materials cost, but by perceived prestige, which historically, platinum has had over gold; today a hand wound Vacheron Traditionnelle in gold is $27,200, while the same watch in platinum is $37,800. Materials costs alone therefore count for much less in the price of luxury watches than perception and the value ascribed to these perceptions is where the margin for luxury watches comes from.

Now, the Accutron prices from 1960 represent the launch of a watch intended to be produced in large volumes – at an industrial scale, in other words; by 1968 Bulova had sold nearly 400,000 Accutrons, and there were some four million made over the entire production history of Bulova Accutrons. The development, research and development, and other costs including the tooling up costs would therefore have been amortized over a very large volume of watches and moreover, prices were established at a time when the ubiquity of wristwatches exerted a downward pressure on prices. The new 314 will be made in much smaller numbers – we’ll probably have a better sense of how few or how many after the launch, but it seems highly likely that this is a niche product for a largely enthusiast base, which is a small audience in comparison to the larger market for watches overall. The 314 not only does not take advantage of economies of scale, it also is not a watch that can draw from an existing industrial base for parts and manufacturing expertise, as we mentioned earlier. Nor are specialist components like the index and pawl fingers and jewels, index wheel, and tuning fork assemblies likely to appeal to third party watch manufacturers (in contrast, for example, to Citizen’s light powered quartz technology, which can be found in third party timepieces like the TAG Heuer F1 Solargraph, or the movements made by La Joux Perret, which is owned by Citizen Group). A small scale production, lack of commercial leverage outside Accutron’s own products, and the need to have some sort of reasonable margin on top of the R&D and tooling up costs, all seem to me important factors in considering the value of the new 314s and the price structure. I will say, though, $31,500 for the gold model seems a little frisky, but there’s an awful lot of that going around these days.

Thanks to Ripwatch for asking me what I thought about the Accutron 314 pricing, which prompted this story.