Watch forums are a buzz over the fact that ETA will be halting all sales of it’s movements to outside watch makers in 2010. ETA is a quasi government-owned company that designs and manufactures watch movements. Some of these go directly to its brands (such as Swatch), others are made in kit form and are sold to outside makers who place the movements in their own watches. The majority of decent automatic movements not made “in-house” by a manufacture, are ETAs. ETA also makes quartz movements.

The creation of a new movement is a very complex and difficult task. After the years of design, more years are spent with testing and refinement. Even with normal daily variation, a watch movement must be over 99.99% accurate. This requirement, along with the stress and years of use, do not allow for simple development. Given this fact, most designers spend their time creating a watch around an existing movement. Only the most exclusive of watch makers make their own in-house movements. Rolex may be an expection, as they make their own movements, and are not priced as high as many of the other companies that make their own movements.

When a watch company wants to use an ETA movement they order a kit, and assemble it. Sometimes a maker will modify, decorate, or add to a movement. A popular example is the ETA 2824-2. This movement has been around since the 1970’s and is still widely used. It is an excellent movement with the potential to achieve chronometer certification. You can see how when ETA puts thought into creating a movement, then bank on it being around for the long haul. Makers have been known to decorate the rotor, add additional complications, or tweak various parts of the movement to make them more accurate (especially when try to apply for a chronograph certificate).

So what will happen in 2010 when ETA stops selling movements to outside watch makers? One reason they are doing so if because of volume and exclusivity. They are making so many movements that they will only have the capacity to make enough for their in-house brands. Most likely, new competitors will emerge and sell different movements. I am not familiar with the number of patents that ETA has, but at least in the US, Patents are only valid for 14-20 years, depending on the type of Patent. Thus, because many of ETA’s movements were designed many years ago, there is nothing barring competitors from making the movements, which will inevitably occur.

I predict that in the next 3 years, ETA movements will be highly sought after because they will cease to be sold outside the company. However, I don’t agree with going out and buying any extra watches due to that. ETA movements are plentiful, and one will still be able to purchase ETA movements from its own brands. Further, it is unlikely that ETA will remain off the market for a long time. Once they have been able to increase their manufacturing output, it is more than likely that they will return to their legacy operations.

This however is a wonderful opportunity for a novice company to step in and change the ETA has run the watch manufacturing ecosystem. We might see new complications, lower prices, and one can only wait and see as to what the quality will be. Until 2010, I am not going to hold my breath. Most watch consumers will not even likely realize the transition.