Sales of smartwatches, including Apple’s top-selling version, have plateaued and are no longer a significant threat to the pricier end of the Swiss watch industry, according to Morgan Stanley.

That’s because the Swiss watch sector has significantly refocused on higher-end products over the past decade, boosting prices of the best timepieces to offset an overall decline in volumes, analysts led by Edouard Aubin said in a report.

When the Apple Watch launched in 2015, it was viewed as an existential threat to an industry which couldn’t compete with the range of health and wellness features that smartwatches can offer.

Smartwatches are still outselling the Swiss watch market by a wide margin, with Apple selling more during one quarter than the Swiss industry does in a year. Yet volumes are starting to decline for the first time since the launch of the Apple Watch, with smartwatch unit sales down 17 percent year-over-year in the fourth quarter and Apple units falling 16 percent.

“Overall, going forward we think the incremental negative impact of smartwatches on the Swiss watches industry will now be relatively immaterial, with the exception of some brands such as Tissot, Rado,” the Morgan Stanley analysts said.

Compound annual growth rate in the Swiss watch industry is likely to gradually converge toward about 7 percent in time, mirroring the personal luxury goods sector, they added.

The industry enjoyed its best year ever in 2022 by value, driven by a renaissance in demand for mechanical timepieces, particularly in the US, with overall exports climbing by 11.8 percent to 24.8 billion Swiss francs ($28 billion)

Morgan Stanley expects Swiss watch export volumes to rise by as many as 1 million units this year, though the majority of the increase will come from the Swatch Group’s MoonSwatch — the highly successful collaboration — between the Omega and Swatch brands. Morgan Stanley expects about 1.8 million MoonSwatches to be sold in 2023, up from 1 million in 2022.

Now priced at about 270 Swiss francs, the MoonSwatch is breaking the cycle of declining volumes for cheaper, quartz-driven Swiss watches.

While the number of mechanical watches exported is down by 2.1 million units since 2014, the contraction of quartz watches is far more severe. There were 10.7 million fewer Swiss quartz watches exported in 2022 compared to 2014, Morgan Stanley estimates.

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