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Between the mid 1970s and 1983, the Swiss watch industry had seen its portion of the world watch market drop from 30% to 10%, in number of units sold.This new situation, brought about by severe international competition and technological changes, led to the creation of the ASUAG-SSIH consortium (later restructured by businessman Nicolas Hayak under the name SMH). ETA, a subsidiary of the group, and its president Ernest Thomke and chief engineer Jacques Müller came up with a brand new product that helped the Swiss watch industry regain some its market share -- the Swatch.

Conventional mechanical watches typically have more than 125 parts. When Swatches appeared in 1983, they had just 51 parts, far fewer than any other analog quartz watch. Major investments in automated production processes lowered manufacturing costs. The ultimate throw-away watches, the new Swatches were sealed into plastic cases and were not designed to be repaired. They sold for between $25 and $35 dollars.

Consumers were attracted by the profusion of Swatch styles and models. Fresh designs and colors, changing every six months at first and then more frequently, assured return buyers. Later, the product line was expanded to include diver models, chronographs, musical alarms, metal cases, and pager watches.

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