18.1 THE SWATCH GROUP LIMITED The Swatch Group Ltd (ʺSwatch Groupʺ) is an international group active in the design, manufacture, and sale of finished watches, jewelry, watch movements and watch components as well as electronic systems. Swatch Group supplies nearly all components required by its... Read more
18.1 THE SWATCH GROUP LIMITED
The Swatch Group Ltd (ʺSwatch Groupʺ) is an international group active in the design, manufacture, and sale of finished watches, jewelry, watch movements and watch components as well as electronic systems. Swatch Group supplies nearly all components required by its eighteen watch brands, and Swatch Group companies supply movements and components to third-party watchmakers in Switzerland and around the world. Swatch Group employs over 28,000 people in over 50 countries, and its 2011 gross sales totaled 7.143 billion Swiss francs.
Swatch SA ("Swatch") is a subsidiary of Swatch Group and is a popular watch brand with some of the most well-known and recognized watches in the world. Today, the Swatch.com website serves as both a source of news and information, as well as a digital storefront for certain regions of the world. Through this website, customers in the United Kingdom, United States, Germany, Sweden, Switzerland, Japan, France, and Italy (and soon other countries) can purchase a range of Swatch-branded watches and jewelry online.
18.1.1 MISSION AND PURPOSE OF .SWATCH
Swatch Group has filed this application for a .SWATCH gTLD to serve as a trusted, hierarchical, and intuitive namespace for the goods and services that Swatch Group provides to its customers on a global basis. Through a unified corporate approach, Swatch Group also intends to submit an application for a .OMEGA gTLD.
Although ICANN has not specifically recognized a .BRAND gTLD specification in the current round, it is widely anticipated in the brand-owner community that this will become a specialty subset of gTLDs. The .SWATCH gTLD is intended to be one of those .BRAND gTLDs, with the goal of protecting Swatch Group's online presence and identity, expanding its marketing and promotion efforts, providing a secure channel for online products and services, and offering a platform on which to consolidate many of the intellectual property activities of Swatch Group.
Swatch Group intends to initially limit registration and use of domain names within the .SWATCH gTLD to Swatch Group, as well as its qualified subsidiaries and affiliates, in particular to Swatch. This initial, limited use will allow Swatch Group to establish its operations and achieve full sustainability. This limited distribution, coupled with the other requirements set forth in Specification 9 of the template Registry Agreement, is intended to exempt Swatch Group from its annual Code of Conduct Compliance requirements.
After Year 3, Swatch Group will evaluate whether opportunities exist to carry out the business strategy for the gTLD through expansion that continues the sustainable operations of the registry through fee-based registrations to parties other than Swatch Group and its qualified subsidiaries and affiliates.
18.1.2 POTENTIAL BUSINESS PLAN
Swatch Group currently plans a four-stage rollout for the .SWATCH. The dates of the following stages are subject to change depending upon business, strategic, and industry factors at the time.
1. Stage One
The initial stage of implementation of the gTLD will involve Swatch Group registering a limited number of .SWATCH second-level domain names.
This initial use will provide Swatch Group's IT and security personnel the time to run a number of tests to ensure seamless and secure access using the .SWATCH gTLD domain names, interoperability with various software and Web-based applications, and unbroken and secure use of all names. This initial allocation will also allow the appropriate Swatch Group staff to coordinate with the internal and external staff responsible for the delegation and setup phases of the .SWATCH gTLD to ensure a proper transition from delegation to full operation.
2. Stage Two
Once all testing has been successfully completed, Swatch Group will begin allocating domain names in .SWATCH for more widespread internal corporate use, including by Swatch. During this same period of time, Swatch Group will begin evaluating strategies to migrate traffic away from its current patchwork network of second-level domain names, which are registered in a variety of TLDs, to the .SWATCH gTLD.
It is in Stage Two that Swatch Group will evaluate expanding the operations of the gTLD to permit registration by other registrants such as licensees and strategic partners. Should an assessment of its expansion strategy lead to a decision to extend registration rights to other parties, this expansion is currently planned to take place during Stage Three, and likely after the first three years of operation. However, any expansion would be conditioned upon a review of the Specification 9 (Registry Code of Conduct) set forth in the template Registry Agreement to ensure compliance with Swatch Group's business model.
3. Stage Three
The third stage is planned to implement the permanent migration of Internet traffic away from the TLDs in which Swatch Group's domain names are currently registered, and toward the .SWATCH gTLD. It is in this stage that Swatch Group also may implement its decision to extend registration rights to other affiliated parties, such as licensees and strategic partners, depending upon compliance with Specification 9 as noted above.
After consideration of the following factors: analysis of Swatch Group's existing domain name portfolio, internal analysis of marketing initiatives, and the fact that Swatch Group will have full control over the number of registrations in the .SWATCH gTLD namespace, Swatch Group is confident that the number of domain name registrations will be less than 10,000 in the first five years of operation.
4. Stage Four
Based on its experience with any expansion implemented in Stage Three, Swatch Group will assess whether its business plan and expansion strategy should be augmented by extending registration rights to a broader class of licensees, and potentially customers of Swatch Group and the Swatch brand. It is anticipated by Swatch Group that changes to the domain name industry, and particularly the impact of .BRAND gTLDs, will take at least five years to be realized and assessed. Any decision to expand the gTLDs beyond corporate, qualified subsidiary/affiliate, and licensee use will take into account this experience as well as the technical analysis of potential expansion.
The potential use of the .SWATCH gTLD will also be driven by Swatch Group's future business strategies as identified in its annual report and investor filings, see http://www.swatchgroup.com/en/investor_relations.
Utilizing current projections based upon Swatch Group's existing businesses, future business plans, current domain name portfolio, and other strategic factors, Swatch Group estimates second-level domain name registrations to be in line with the projections set forth in the financial template provided in its response to Question 46 of this application.×