The Quartz Crisis of Software Engineering

What Swiss watchmaking's fourteen-year collapse and improbable recovery has to say about the question software engineering is implicitly organized around — and what happens when that question becomes unanswerable.

In December 1969, Seiko shipped a watch called the Astron. It told the time to within five seconds a month. Every mechanical watch in existence, including the best Swiss chronometers, lost or gained about a minute a month. The new watch was roughly an order of magnitude more accurate at launch, and within a decade the gap would widen substantially. It cost about as much as a new Toyota Corolla.¹

Fourteen years later, Swiss watchmaking employed 33,000 people. It had employed 90,000 the year the Astron launched.²

This is the part of the story everyone knows. The part worth knowing — the part that matters for any industry facing its own Astron moment — is what the survivors did next. They did not make better mechanical movements. They did not switch to quartz. They did a third thing, and it worked so well that today the most expensive mechanical watches ever made are Swiss, and the industry ships roughly half the units it shipped in the 1974 peak for aggregate export value multiple times larger than the 1970s peak.³

Software engineering is somewhere around 1973.

The three moves that don't work

When an industry is told its product is about to be obsoleted, there are three obvious responses. Each of them failed the Swiss.

The first is to make the old product better. The Swiss had the finest watchmaking schools in the world — Le Locle, La Chaux-de-Fonds, Vallée de Joux. They had apprenticeships running centuries deep. They had the Valjoux and Lemania movement ecosystems, the finishing and decoration traditions, the whole craft infrastructure. They kept refining mechanicals throughout the crisis. The market stopped caring. You cannot beat quartz on accuracy. The axis of competition had been removed.

The second is to adopt the new technology. The Swiss actually had quartz first: the Centre Electronique Horloger in Neuchâtel demonstrated the Beta 1 movement in 1967, two years before the Astron.⁴ But the cost curve, the integrated-circuit fabrication, and the industrial scale were Japanese. Seiko made many of its key quartz patents freely available, specifically to keep Japan's market lead unassailable. By the time the Swiss took quartz seriously as a mass-market product, the price floor was being set in Tokyo and Osaka.

The third is to wait out the cycle. This is what most incumbents chose. It took fourteen years for the employment numbers to finish collapsing. During those fourteen years, there were constant green shoots: quarters when demand ticked up, brands that caught a wave, tourists who kept buying what tourists had always bought. It is always possible, during a structural collapse, to construct a narrative where the collapse is actually over. The number that mattered — headcount — went from 90,000 to 33,000 across those fourteen years. Every two years, a Geneva-sized piece of the industry disappeared.

There was a fourth move. It looked insane at the time.

The Swatch paradox

In 1983, with the industry more than halfway through its collapse, the creditor banks holding the distressed remains of SSIH (the Omega-Tissot parent) and ASUAG (the ETA movement conglomerate) forced a merger into what became SMH, later Swatch Group. Nicolas Hayek, a Lebanese-born management consultant who had been advising the banks, became SMH's chief executive in 1986 and the movement's public face.⁵

What Hayek did with this new entity is the move worth studying.

He launched a plastic watch.

It cost fifty Swiss francs — less than any Swiss watch in living memory. It ran on a quartz movement, the exact technology that was killing the industry. It had one-third the components of a conventional quartz watch, welded shut, not meant to be serviced. It came in pop colors. The earliest collections included commissioned pieces by Keith Haring and Kiki Picasso; Annie Leibovitz photographed a later campaign.⁶ The Swiss watchmaking establishment regarded it with approximately the horror you would expect.

It sold more than twenty million units in its first three years. Fifty million by 1988. A hundred million by 1992.⁷

Here is the paradox worth sitting with: the company that saved Swiss mechanical watchmaking did it by aggressively adopting the disruptor's technology and out-producing Japan at the disruptor's own game. Hayek did not fight quartz. He used the cash it threw off to finance something stranger.

On top of the Swatch manufacturing base — which kept ETA's movement factories, the Swiss tooling ecosystem, and the watchmaking schools alive — mechanical watchmaking quietly repositioned. Not as a more accurate timepiece; that argument had been lost. Not as a cheaper timepiece; that argument had also been lost. As something else entirely.

Stripped of its monopoly on accuracy, mechanical watchmaking was forced to rediscover its deeper value — craft, tradition, finishing, and mechanical complexity took on new meaning.⁸ A. Lange & Söhne was re-founded in Saxony on 7 December 1990 explicitly as an expression of human labor, continuity, and authorship. Patek Philippe's tagline — you never actually own a Patek Philippe, you merely look after it for the next generation — is a 1996 invention, more than a decade into the reframe. By 2025, Swiss watchmaking was exporting roughly 13 to 14 million units — about half the 2011 peak by volume — at aggregate export values in the same range as the all-time 2023 high.⁹

The reframe was not marketing. It was an honest answer to the new question.

The question that collapsed

Every mature industry is organized around a question it implicitly promises to answer. Before 1969, Swiss watchmaking was organized around whose watch tells time more accurately and reliably. Every competitive dimension — tourbillon regulation, chronometer certification, observatory trials — was a sub-question of that main question. Prices, prestige, and careers were priced on it.

After 1985, the main question became unanswerable. Not hard to answer — unanswerable. A five-dollar Casio beat the finest Patek Philippe on accuracy. You could not talk your way out of this. The dimension had dissolved.

The question that replaced it was not a refinement of the old one. It was a different question entirely: whose watch is worth wearing on my wrist, where people can see it, every day, as a small daily statement of who I am and what I care about?

That question has no benchmark. It cannot be decided by engineering. It depends on the customer, the social context, the story the brand tells, and the hand-finishing visible through a sapphire caseback. It is answered in different ways by different people, and the market expanded to accommodate all of them.

Now consider the question software engineering has been implicitly organized around for roughly seventy years: who can produce correct, performant code fastest? Every competitive dimension — language wars, framework battles, IDE optimization, whiteboard interviews about algorithmic efficiency, Stack Overflow reputation — is a sub-question of that main question. Careers have been priced on it.

The question is collapsing.

Roughly 85% of developers now use an AI coding tool regularly; a substantial fraction of code committed in 2025 was initially suggested or generated by a model.¹⁰ SWE-bench Verified scores of the top coding agents have compressed into a narrow band — numbers that will be higher by the time you read this and irrelevant the month after that.¹¹ An early-2025 METR randomised trial produced the finding that still surprises people the most: a small group of experienced developers working on complex tasks in large open-source repositories took about 19% longer when allowed to use AI tools than when not, even though they believed themselves faster. The effect size is large; the sample is small and the finding has evolved with follow-up data, but it is the cleanest published look to date at where the AI-productivity picture is and isn't simple.¹²

That inversion is the Astron moment. The tool layer does one thing genuinely well — routine code generation — and it does it well enough that a junior developer with it can match a middle-tier senior without it, on a subset of tasks, on paper. The axis of competition is being removed. Not the whole axis. The part that companies were paying for.

What the survivors were actually selling

This is the part the Swiss figured out reluctantly, over a decade of watching the obvious strategies fail.

Customers who bought expensive mechanical watches in 1960 had told themselves — and been told by the industry — that they were paying for accuracy and reliability. They were not, entirely. They were paying for something people can only articulate later, when the thing they thought they were paying for has been stripped away and the remainder becomes visible. The remainder was: craft, continuity, the story of the maker, membership in a culture that values those things, an object that carries meaning across generations.

The industry had been selling something other than accuracy all along, and just hadn't admitted it.

The parallel conjecture for software is that the industry has been selling something other than code output all along, and just hasn't admitted it. What a good senior engineer actually delivers to a company — the thing that makes an employer willing to pay them well into six figures for work whose daily keystrokes could, in principle, be produced by a junior in an AI-forward IDE — is not lines of code. It is judgment about which lines of code to write. It is taste in problem framing. It is a trained intuition for which failure modes are real and which are imagined. It is accountability: someone whose name is on the door when the system breaks at 3am, who will be there the next week and the next year. It is authorship of a system's implicit decisions, which persist long after the person making them is gone.

None of this is captured by a SWE-bench score. None of it is going to be captured by any benchmark, for the same reason no benchmark captures whether a watch is worth wearing. The question is categorically different.

The practical implication for a developer or a tech leader reading this is specific: the work that survives commoditization is the work that answers the question whose judgment is encoded in this system. Architecture reviews survive. Incident post-mortems survive. The choice of what not to build survives. The long conversation with a customer about what their real problem is survives. Teaching a junior how to think through a trade-off survives. Writing a module that implements an obvious spec does not survive, and it was never really what the senior was paid for anyway.

Where the analogy breaks

Any cross-domain argument this strong is worth pressure-testing before it settles into a worldview.

Three honest ways the Swiss analogy breaks for software.

First, mechanical watchmaking had an intrinsic aesthetic asset — the visible craft of moving parts, hand-finishing through a caseback — that software does not. A system's judgment, taste, and authorship are real, but they are invisible except in their second-order effects. The reframe has to happen in how the work is described, priced, and contracted, not in how it looks on a shelf. That is harder.

Second, the Swiss reframe was underwritten by geography. Swiss Made is a legal designation that enforces scarcity. Software has no comparable moat. The equivalents — regulatory approval, audit trails, security certification, sovereign-AI rules — are partial, contested, and technically portable. Some of the reframe will come from these, but they won't carry the full weight Swiss geography carried.

Third, the Swiss had time. Fourteen years from Astron to Swatch is long by any measure; it is centuries long on the timescales at which agentic systems now iterate. The software industry will not get fourteen years of denial. The tool layer is improving on monthly cadence, the model layer on quarterly cadence, the market structure on a cadence faster than most human institutions can track. If there is a software-engineering Hayek, their window to consolidate is measured in cycles, not decades.

The analogy is load-bearing in the ways that matter — the question that collapses, the non-obvious answer to what the industry was actually selling — and fragile in the ways historical analogies are usually fragile, which is on timing and mechanism. Don't lean on it for prediction. Lean on it for permission to ask the right question.

The Hayek move

If you take one thing from the Swiss case, it should be the counter-intuitive core of what Hayek did. He adopted the disruptor's technology so aggressively that he out-produced Japan on the disruptor's own terms. He used the cash that threw off to finance a repositioning of the human work — craft, authorship, continuity — into a layer the disruptor could not commoditize.

The corresponding move for software engineers, and the companies that employ them, is not subtle. Use the AI coding tools hard, as the default substrate, without sentiment. Out-produce anyone who still refuses to use them on the layer those tools are good at. Then redirect the reclaimed attention to the layer no tool can commoditize yet — architectural judgment, problem framing, and the accountability and authorship that survive long after the code is being generated by something that does not remember what it did yesterday.

The developers currently making a principled stand against AI tools are making the same bet as the Swiss firms that refused quartz in 1972. It is an understandable bet and an honorable one and it will not work. The developers who believe AI tools will replace the need for judgment are making the opposite bet, which is also wrong but less dangerous, because it will be falsified faster.

The narrow path Hayek walked is the one worth studying. Adopt the new technology completely. Reframe what you charge for. Be honest, finally, about what you had always been selling.

In December 1969, Seiko shipped the Astron. In November 2022, ChatGPT went public. The interesting question for the next few cycles of software engineering is not whether the Astron moment is here — it is. It is which firms and which individuals are quietly designing their Swatch, and which are still grinding a better mainspring.

The work that survives commoditization is the work that answers *whose judgment is encoded in this system.*

That is the watchmaker's sapphire caseback for software — the visible hallmark of authorship. Agent Rating Protocol is the mechanism: every signed agent record names the judgment that was applied, the human or agent who applied it, and the downstream artifacts that inherit from it. Not a benchmark score. A signed record of whose taste is inside this, verifiable across the agent chain. The Hayek move for software is to let the tools do the routine and stake the rest of your reputation on the hallmark.

See a signed record of an agent's judgment · Follow the hallmark through a chain · pip install agent-rating-protocol

1. Seiko Museum Ginza, history of the Quartz Astron (launch 25 December 1969; 450,000 yen, roughly the price of a medium-sized Japanese car at the time). ↩

2. Wikipedia, "Quartz crisis," aggregating Federation of the Swiss Watch Industry (FH) and Seiko Museum Ginza data on Swiss watchmaking employment across 1970–1988. The 90,000-to-33,000 fall is the 1970–1983 window commonly cited; employment continued to fall to roughly 28,000 by 1988. ↩

3. Federation of the Swiss Watch Industry, 2024 and 2025 export statistics; 2011 is the modern volume peak (~29 million units). ↩

4. CEH Neuchâtel / Chronopedia; the Beta 1 prototype was tested at the Neuchâtel Observatory in August 1967, and the Beta 21 derivative went on sale in 1970, four months after the Astron shipped. ↩

5. SMH / Swatch Group corporate history. The 1983 SSIH–ASUAG merger was driven by creditor banks; Hayek advised the banks, took a majority stake with a group of Swiss investors in 1985, and became SMH's chief executive in 1986. Swatch itself was created inside ETA by Ernst Thomke, Elmar Mock, and Jacques Müller; Hayek's role was in the consolidation and subsequent strategy. ↩

6. Swatch Group artist-collaboration archive. ↩

7. Swatch Group / Wikipedia. First-three-year sales exceeded 20 million units; 50 million by 1988; 100 million by 1992. ↩

8. Paraphrasing the common historiography of the mechanical revival (see Europa Star's "Debunking the Quartz Crisis" and Seiko Museum Ginza on the recovery). ↩

9. A. Lange & Söhne corporate history (re-founded 7 December 1990 in Glashütte, Saxony, as Lange Uhren GmbH); Leagas Delaney Patek "Generations" campaign, 1996; Federation of the Swiss Watch Industry, 2025 export figures. 2023 remains the all-time export-value record. ↩

10. JetBrains State of the Developer Ecosystem 2025 (approximately 85% of developers using AI tools regularly); Stack Overflow Developer Survey 2025 (84% using or planning to use AI tools). Both headline figures are aggregate secondary reporting and should be pinned to the primary surveys before external citation. ↩

11. Cross-vendor SWE-bench Verified comparisons, early 2026. Specific scores move month-to-month; directional claim only. ↩

12. METR (Model Evaluation & Threat Research), "Measuring the Impact of Early-2025 AI on Experienced Open-Source Developer Productivity," 10 July 2025 (metr.org; arXiv:2507.09089). Randomised trial with 16 experienced developers; 19% slowdown with AI allowed; 95% CI roughly +2% to +39%. METR published a February 2026 update noting follow-up data from the same cohort has moved the estimate. ↩