Montres Rolex S.A. History

Company Perspectives:

Ever since its creation, Rolex has consistently focused on establishing the renown of the Rolex brand worldwide, ensuring that the Oyster is far more than a passing trend. To safeguard its reputation for quality and reliability, Rolex has created a global network of specialists who alone are qualified to guarantee Rolex owners worldwide of the authenticity of their watch and the dependability of the features which ensure its longevity. Key Dates:

Key Dates:

1905:

Company is founded as Wilsdorf & Davis in London.

1908:

The Rolex brand name is introduced.

1919:

Company moves to Switzerland.

1926:

Introduction of Oyster model, the world's first waterproof, airtight wristwatch.

1931:

Introduction of the Perpetual model, the first waterproof, self-winding wristwatch.

1960:

Founder Hans Wilsdorf dies.

1963:

André Heiniger is appointed as company's CEO.

1988:

Introduction of Oyster Chronograph Chronometer.

1992:

Introduction of Oyster Perpetual Yacht Master; Patrick Heiniger is appointed CEO.

1995:

Opening of new company headquarters.

Company History:

Montres Rolex S.A. is the best known of the premier producers of fine watches in the world. Recognized as an innovator in technology and marketing, the company is credited with establishing the widespread popularity of the wristwatch in the early 20th century. Rolex watches are prized for their precision timekeeping, durability, functionality, and distinctive design. Rolex's mystique as a closely held private company and its carefully cultivated image continue to strengthen the watch's desirability as a status symbol as well as a precision instrument. Based in Geneva, Switzerland, where the company opened a new headquarters in 1995, Rolex has become closely linked with a number of major events in such sports as yachting, equestrian riding, golf, and tennis. Rolex watches&mdash…ailable in stainless steel, gold, and platinum, and with or without custom-set precious stones on the dial, crystal, or band--retail anywhere from $2,400 to over $100,000.

Developing the Wristwatch: Late 1800s and Early 1900s

The company's founder, Hans Wilsdorf, was born in Kulmbach, Bavaria, on March 22, 1881. One of three children, Wilsdorf was orphaned at the age of 12. He was raised by his uncles, who encouraged him to be independent and self-reliant at a very early age. According to Osvaldo Patrizzi, author of Orologi Da Polso Rolex, Wilsdorf later attributed his success to that early upbringing. As a teenager, Wilsdorf studied mathematics and languages at school and apprenticed with a prominent exporter of artificial pearls. At 19 he went to work as an errand boy and English translator for Cuno Kourten, a major clock and watch exporter in La Chaux de Fonds, Switzerland, which, along with Geneva, formed the hub of the high-quality watchmaking industry at the time. There, Wilsdorf was exposed to the most influential people and practices in watchmaking, which would later be an important asset in the founding and success of Rolex.

In 1903 Wilsdorf moved to London, where he worked for a large watch store. Two years later, he borrowed money from his sister and brother-in-law to establish his own company, Wilsdorf & Davis, with his brother-in-law a partner in the venture. Wilsdorf chose London for his new enterprise at least in part because of its position at the time as the world's economic center. Its colonial holdings gave England tremendous wealth as well as a network of trade avenues that would later be advantageous in Rolex's international business.

Wilsdorf soon distinguished his company from its many successful competitors in two essential ways. First, he was tireless and methodical in pursuit of perfection in his products. Second, he specialized in unusual items, most notably the wristwatch. Pocket watches were still the accepted timepiece, with wristwatches considered inelegant and useful only for specialty purposes, such as sporting activities, where it was impractical to consult a pocket watch. The association of the wristwatch with hard physical work gave it a rough reputation that was distasteful to the genteel consumer. In his book Timeless Elegance--Rolex, George Gordon noted that men of the time were heard to say they would 'sooner wear a skirt than a wristwatch!'

The wristwatch also presented logistical difficulties, including ensuring accuracy in so small a device and avoiding damage in the watch's unprotected position on the outside of the wrist: unlike a pocket watch, a wristwatch was exposed to blows, moisture, and dust. Shipments of wristwatches sent abroad were often found to have rusted by the time they arrived from exposure to dampness.

These obstacles were a galvanizing force for Wilsdorf, who cast a shrewd eye to the future. He calculated that resistance to the wristwatch would wane as its usefulness grew with the changing times. The wristwatch was already becoming more popular with young people and with the fashion world, which appreciated its ornamental value.

The wristwatch was also becoming more suitable for an increasingly active and mobile society. Technological innovations made travel to distant shores available to a significant number of people. People also began to appreciate a variety of new sports that required rugged, specialized equipment, of which the wristwatch became an indispensable part. Flying expeditions, car racing, mountain climbing, and sea exploration grew in popularity and caught the public imagination. Rough and tumble sports began to take on a reputation as romantic and adventurous. Rolex would capitalize on these associations and promote this image heavily in its marketing materials.

Early in his venture, Wilsdorf demonstrated his nature as a risk-taker and innovator by making a large investment in small caliber lever escapement wristwatches. He spent several hundred thousand Swiss francs, five times the capital of his firm, on the first order. Wilsdorf purchased the internal mechanisms from the Swiss firm of Herman Aegler, a manufacturer whose reputation for quality Wilsdorf knew from his time as an apprentice. The mechanisms were machine-made and so were available at a reasonable price; they were also durable and precise.

To house the mechanisms, Wilsdorf supplied the cases, which he purchased from well-known English manufacturers. The cases were made in sterling silver and three types of gold in a wide array of styles for dress, casual, or sportswear. The watches sold briskly in England and abroad, including the Far East. Working in concert with Aegler on logistical aspects of production, Wilsdorf developed a line of immensely popular watches.

Introducing the Rolex: 1908

The next several years saw many changes and innovations at Wilsdorf & Davis. In 1906 Wilsdorf introduced the expandable metal watch strap. This style of strap, made to match the watch case, would become a signature Rolex look continuing to the present day. The next year, Wilsdorf opened a technical office at La Chaux de Fonds, Switzerland. Wilsdorf delegated the management of that office, obtained British citizenship, and settled in London, marrying a short time later. In 1908 he coined the name 'Rolex' to establish a signature brand that would distinguish his product from other watches that may even have contained the same parts. Wilsdorf reportedly settled on the name Rolex because it was easy to pronounce in different languages and short enough to show clearly on a watch face.

This move demonstrated Wilsdorf's farsightedness. Although it later became common practice to use one brand name for the entire watch, this was a new idea at the time. As watch parts came from different manufacturers and distributors, it was the retailer's name that appeared on the watch face and internal movements. Wilsdorf justified his desire to use his own trade name by maintaining that the watches he sold had to meet more stringent quality criteria than either the manufacturer or the other suppliers required. Initially, Wilsdorf met with great resistance from retailers. By placing only a small number of watches with the name 'Rolex' on the face with the other watches in an order, Wilsdorf was able to convince retailers to take the Rolex-brand watches along with the ones stamped with the retailer's name. He gradually introduced the Rolex name in the marketplace by increasing the proportion of Rolex watches in his shipments over time. An intensive marketing campaign later solidified the name recognition of Rolex. By establishing an identity separate from that of the retailer, Wilsdorf had shifted the balance of control in his favor, and retailers came to rely on the Rolex name as a customer draw as much as Wilsdorf relied on the retailers for market exposure.

At the time that Wilsdorf established the Rolex brand name, he began to focus in earnest on the production of wristwatches with the accuracy of a chronometer. Two milestone awards were bestowed on his timepieces in 1910 and 1914. In 1910 Wilsdorf & Davis was given the world's first certificate of a first-class chronometer for a wristwatch from the School of Horology at Bienne, Switzerland. In 1914 a Rolex wristwatch was awarded a Class A certificate by the distinguished Kew Observatory in England, the first given to a wrist chronometer. The certificate required passing a series of tests over 45 days. The watch was tested in five different positions and three different temperatures, including ambient (65 degrees Fahrenheit), oven-hot, and refrigerator-cold. After earning its Class A certificate, the company insisted that all Rolex watches would be required to meet chronometer standards, and none would be sold without a certificate. In fact, self-imposed standards were applied to all of the internal mechanisms received from outside suppliers. If the movements did not meet the standards after seven days of rigorous testing, they were rejected. The reputation of the Rolex as a quality instrument continued to grow.

Postwar import tax increases prompted Wilsdorf to move his company headquarters to Switzerland in 1919. He established Montres Rolex S.A. in Geneva and retained the London office as a branch office. In the 1920s, Wilsdorf established Rolex's image as a sportsman's technological tool. He tackled the problems of moisture, dust, and heat resistance and began working toward an automatic winding mechanism. He introduced new styles that were waterproof, lightweight, and durable. He also began a series of innovative marketing events showcasing Rolex watches in real-world action. As he introduced new models, he would link them to events generating new records in sporting and technological achievement. In particular, he focused on sports events requiring considerable daring and, most often, considerable means. The elite sporting associations made Rolex popular not only with sportsmen but also with wealthy spectators as the watch became a status symbol. In 1925 Rolex registered the crown trademark, a symbol of its elite aspirations.

Rolex introduced the Rolex Oyster, the world's first waterproof, airtight wristwatch in 1926. He patented the twinlock and triplock screw-down crown and the waterproof case. The following year marked the first of many record-setting marketing events. Mercedes Gleitz swam the English Channel in the record time of 15 hours and 15 minutes, wearing a Rolex watch. When she emerged, the watch had kept perfect time. To capitalize on the event, Rolexes were often displayed in aquariums in jewelers' windows. By 1927, 'Rolex' was printed on the case, movement, and dial of all Rolex watches. The following year saw the introduction of the Rolex Prince, an elegantly styled timepiece that gained a reputation as a gentleman's watch.

Technological Innovations in the 1930s

In 1931 Rolex introduced the Rolex Oyster Perpetual, the first waterproof, self-winding wristwatch. The rotor automatic winding mechanism, invented by Rolex's technical chief, was semicircular and able to turn both clockwise and counterclockwise, so that the movement of a wrist could wind it. The watch was even more accurate than a traditional watch, since the tension put on the mechanism by constant winding was greater than that provided by winding done once a day. In another marketing coup, in 1935 a Rolex Oyster went over 300 miles per hour on the wrist of Sir Malcolm Campbell as he set the world land-speed record in his race car at Salt Lake Flats.

The 1940s were a significant decade for the future of Rolex. In 1944, Wilsdorf's wife died after a four-day illness. The couple had no children, and Wilsdorf was determined to protect the business he had created, even after his death. He set up the Hans Wilsdorf Foundation and transferred his interest in Rolex to the foundation, creating a governing council and detailing precisely how he wanted the funds handled. His specifications included large donations to charity, horological institutions, universities, and professional schools.

Rolex achieved an industry record in 1945 with 50,000 certificates for wrist chronometers. The company introduced four new models over the next few years, the Date Just in 1945, the Rolex Moonphase in 1947, and the Rolex Day/Date/Month and the Oyster Day/Date/Month in 1949.

In 1953 Rolex enjoyed another marketing coup when the British Himalayas Expedition reached the summit of Mount Everest wearing Rolex Oyster Perpetuals--which lost no accuracy in extreme weather and rough handling. A new Day/Date model was introduced in 1956 that had the day written in full in one of 26 languages. The first automatic waterproof watch, the Submariner, was introduced in 1953, with resistance to 100 meters' depth, and the GMT Master, a watch for pilots that tracked time in two different time zones simultaneously, was introduced in 1955.

In early 1960, Rolex performed its most astonishing feat when the bathyscaphe Trieste emerged from 35,798 feet with a special Oyster attached to its outside still running perfectly. The watch had been exposed to a pressure of almost seven tons per square inch.

Later that year Hans Wilsdorf died at the age of 78, and in 1963 André Heiniger assumed leadership of the company. Heiniger, born in 1921 at La Chaux de Fonds, continued to guide the firm in much the same way Wilsdorf had. During Heiniger's tenure, however, tradition became more the focus than innovation. Rolex continued to do well by keeping quality high and production relatively low, maintaining a steady course through fluctuations in the economy, explosions in the price of components such as gold, and the flood of electronic parts into the watchmaking industry.

In 1971 Rolex introduced the Oyster Perpetual 'Sea Dweller,' the first diving watch with a helium valve for saturation diving, which was waterproof to 2,000 feet. In 1975 six divers won the world diving record off the Labrador coast in Canada, reaching 350 meters wearing Rolex Sea Dwellers. In 1978 Rolex introduced a quartz movement Oyster, waterproof to 165 feet and resistant to magnetic pull up to 1,000 oersted. The same year, a Rolex Oyster Quartz reached the top of Mount Everest, as Reinhold Messner made a significant climb without an oxygen mask. In 1973 Tom Shepperd crossed the Sahara wearing a Rolex Oyster GMT Master, which was unimpaired by exposure to extreme heat or sand storms.

Success Symbol: The 1980s and Beyond

During the 1980s, Rolex introduced improved versions of its traditional styles. The Rolex Oyster Perpetual Chronograph Chronometer Daytona with tachometer was introduced in 1988, and by 1989 over half of all the Swiss chronometers certified by the Swiss Institutes for Chronometers had been produced by Rolex. The year 1990 marked the manufacture of ten million chronometers. New models such as the Oyster Perpetual Yachtmaster built on Rolex's reputation for creating instruments for the elite sporting set, and advertising targeted such upscale magazines as Gourmet and Outside, showing Rolex watches in action with such elite performers as the U.S Equestrian Team and the U.S. Sailing Team.

From the early 1960s through the mid-1990s, Rolex's sales increased by approximately 20 percent a year, while the production of about 500,000 watches a year, well short of demand, kept the price high. In fact, Rolex was so successful in creating a status icon that counterfeiting became a major issue for the company. To deter counterfeiters, Rolex invested in an anti-counterfeiting device that was not reproducible. Equally inimitable was the quality built into each timepiece; in the 1990s Rolex remained one of only a few Swiss manufacturers still doing a majority of hand building, carefully guarding its niche as a producer of durable luxury chronometers.

In the 1990s, Rolex introduced two new models, each the result of some five years of development. The first of these debuted in 1992, as the Oyster Professional Yacht-Master. The second, introduced in 2000, was directed at the women's market and extended the company's Oyster Daytona range, with the Oyster Perpetual Daytona for women. In 1992, Rolex's board of directors appointed Patrick Heiniger to lead the company into the next millennium. Heiniger continued the company's association with the high-end sports bracket, placing the Rolex name on such prestigious sporting events as the U.S. PGA Championship tournament, The U.S. and British Masters golf tournaments, the Rolex International Polo and Equestrian Championship, as well as events in the professional tennis and yachting sports circuits. In 1995, Rolex moved into new headquarters, known as Rolex VII, located on the outskirts of Geneva and housing some one-third of the company's employees. There, the company remained committed to its tradition of excellence and quality.

Principal Subsidiaries: Rolex Watch U.S.A., Inc.; The Rolex Watch Co., Ltd. (U.K.).

Principal Competitors: LVMH Moët Hennessy Louis Vuitton SA; Movado Group, Inc.; Compagnie Financiere Richemont AG; The Swatch Group SA; TAG Heuer International SA.

Further Reading:

• Aehl, John, 'Rolex Presents Its Big Moments in Time,' Wisconsin State Journal, October 29, 1993, p. 1.
• Gordon, George, Timeless Elegance--Rolex, Hong Kong: Zie Yongder Co., Ltd., 1989.
• Jardine, Cassandra, 'Timeless Mystique of the Rolex,' Business-London, February 1988, pp. 114-17.
• Patrizzi, Osvaldo, Orologi Da Polso Rolex, Milano: Antiqorum Italia Srl, 1992.
• 'Rolex Plans $10 Million Site Near Lititz; Ultra-Secretive Maker of Ultra-Expensive Watch to Build Service Center,' Lancaster (Pennsylvania) New Era, February 19, 2000.
• Sasseen, Jane, 'Consumer Products: Stop Thief,' International Management, September 1990, pp. 48-51.
• Schnorbus, Paula, 'Tick Tock,' Marketing & Media Decisions, October 1988, pp. 117-32.

Source: International Directory of Company Histories, Vol. 34. St. James Press, 2000.

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