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Baselworld 2010

Finally I have a little bit of time to finish by much overdue Baselworld report. Well at least I won’t have to compete for eyeballs now :)

As usual I arrived the day before the fair is opened to the public. At this point the town is still quiet. There are some press around and the buyers are beginning to trickle into town.

For those of you that do not know the town of Basel it occupies a unique geographic location in that it is actually “in” three different countries: Switzerland, France, and Germany. The airport itself is actually divided into sectors by country although the immigration desks now are rarely in use.
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Kingston Non-dates are here!

The non-date Kingston C3 and BGW9 watches are here! This is the first batch of 100 watches (50 of each type). If you received the e-mail about submitting your parts kit orders you are in this first batch. We are sending out a second batch of the non-dates and the first batch of date dialed Kingstons to the assembler in January.

The watches will be going out to the first 100 pre-order customers that ordered a non-date BGW9 or non-date C3 watch. I realize that this isn’t going to cover all of the Plankowners but this is the most efficient method to deliver as many watches as quickly as possible. However, this process still covers the vast majority of the Plankowners.

The watches arrive here in a semi-finished state. This is done so that we minimize process oriented damage to the cases and bracelets and to ensure the best alignment possible for the bezel and dial. The watches still need to be verified for timing and to have the protective coating removed. Shipments are expected to begin next week and the process to get the first 100 out the door will take several weeks to complete.

Kingston Update

The parts kit ordering page is up. At the moment we are only taking orders from the first 100 customers that we will be shipping to first so we can concentrate on shipping rather than the paperwork for all of the customers. We have updated the ticket system to provide those customers with the ordering link. The ordering link will not be publshed in a public way on the site. You will need to login to the ticket system or refer to the e-mail generated by the tickert system to get the url address.

Please note that unless you order a black or gold date wheel and/or an extra strap you will not need to submit payment. You may choose the “PayPal” payment option that will allow you to check out without submitting payment. If you are purchasing a black or gold date wheel and/or strap please check out as normal and remit payment.

If you have any questions please send us an e-mail.

Kingston Update

The watches are leaving Swtizerland some time this week. Our plan at this point is to begin shipments next week. We just finished updating the tickets for the first batch of BWG9 and C3 customers and I will be working on the parts ordering page later today. We will do our best to deliver as many orders in time for Christmas as we can.

Kingston Update

There will be a new update available by Monday, Dec. 6th.

Mk II Restructuring

Industry shifts

There are two major industry currents that are impacting us right now. The first is ETA’s efforts to remove themselves as the movement supplier of necessity for most of the Swiss industry. In my opinion it will not be a matter of “if” but a matter of “when” this will take place. The foundation for their exit has already been laid by the verticalization trend and companies like Sellita and Soprod. Assuming ETA is successful in its efforts my belief is that the transition will take quite some time. At the moment we are close to finalizing our first order with one of two alternative suppliers I have been talking to over the last few years. I should note that we are still receiving orders from ETA and will be placing our orders for 2012 in the next few weeks. The spigot is still open, just no one knows for how long.

Production capacity is the second intermediate term issue impacting the industry. The downturn in late 2008 was so sudden and extreme a lot of companies either folded, downsized, or radically restructured. The end result is that every point in the supply chain, with the exception of movement supply, is being choked by a shortage of skilled labor. I have counted myself lucky that all of our key suppliers are still standing (knock on wood). The reality is though that the Kingston, for example, is taking longer than expected for a number of small but not insignificant reasons related to this issue.

Mk II: Restructuring the business

There are several reasons for the strategic review that will be concluding in December and enacted at the end of January 2011:

* Customer service: I have made continual efforts to improve customer service over the last few years but the reality is that improvements have been hard to sustain.

* Operational efficiencies: One my major assumptions is proving to be wrong. I had assumed that I would be able to make enough improvements to operational efficiency so that I would be able to allocate more time to taking care of customers and the other administrative issues that I have to attend to. The reality is that I have nearly completed all of the operational improvements that I identified. While some of those added efficiencies will only begin to have a positive effect early next year it was obvious to me a few months ago that the cumulative effect would not be large enough.

* Watch Offering: Many of you may not realize that about 3 years ago I made the decision to build my own watch collection. Contrary to the perception of any marketing genius, we have spent the last few years building a supply chain and a collection of watches to sell and almost no time selling our watches. After 3 long years we finally have a complete offering that offers a critical mass for the company but I do not have enough time to allocate to Mk II’s marketing needs.

To help me re-organize the business I brought in a friend of mine that is a successful senior executive to help me think through Mk II’s future. Here are the conclusions:

* We need to sell more watches based on the anticipated changes that ETA is lobbying for.
* I work too hard because I have under-estimated the “cost” of my work. There is a good reason for this though. When your building a company by pulling on its own boot-straps you basically have to do everything. The company though is now too big to continue to grow this way. We have to adjust our pricing to reflect the total time required to build our watches.
* Our procedures and processes have to be updated. Most of this is back-office stuff that I have to do to make my job easier to manage the new structure.

This what these conclusions will mean to our customers and fans:

* Adding original designs to the watch collection: This process has already begun.
* Custom Option: This will be reserved for the Professional Series (price will also be being going up significantly on the custom option for those watches)
* We will shift to doing limited series versions of the Specialist Series in place of offering a custom option for this collection.
* Prices increases: Prices will be increasing across the entire collection starting January 31, 2011. This is primarily due to the devaluation of the dollar, in addition to the adjustments required by the new strategy.

Expected benefits to our clients and fans:

* Shorter lead times: We will be shortening lead times for custom watches to 6 weeks and to keep the backlog to 6 weeks by restricting ordering when there are delays
* Improvement to customer service: This should improve by the fact that the new strategy should give me more time.
* We will continue to do homage watches but they will be largely done within the parameters of the Specialist Series. The Project 300 will be the noticeable exception but likely to be a very rare exception.
* The value proposition will not change radically but it will change

The changes will take place on January 31, 2011. Until then the custom options and and the prices will stay the same. The one exception will be the Paradive where the pre-order price of $1,150 will be increasing to the standard MSRP of $1,395 on December 1, 2010. I wanted to announce these changes well in advance of the January 31st deadline to allow all of our fans to take advantage of the current pricing. If we see a un-manageable surge in custom watch orders we will begin restricting ordering ahead of January 31.