http://www.ft.com/intl/cms/s/0/0293f398-caf6-11e3-9c6a-00144feabdc0.html#axzz34FaC3OLg

I don't own any Zeniths but this seems (at least to me) to be a step backwards.

It seems to be intermittently paywalled, so for those unable to access, here's the article:

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June 6, 2014 12:10 am
Zenith sacrifices self-reliance to underpin growth

By Robin Swithinbank

©yves-andre.ch
Zenith’s headquarters in Le Locle, Switzerland
In light of the watch industry’s continued obsession with in-house production strategies, Zenith’s announcement at Baselworld this year that it was forsaking its pure manufacture status by outsourcing movements came as a surprise.
Over the past decade, established watch companies have sunk vast sums into building a self-reliant future, making Zenith’s announcement that it is doing the opposite appear incongruous.
But the company says the decision is a pivotal part of an ambitious expansion plan that will take it into the mainstream and transform its fortunes, turning it from an insider brand into one of the industry’s bigger names.
“There are two reasons behind the decision,” says Juliette North, Zenith’s global marketing director, who spoke to the Financial Times because the company’s chief executive, Jean-Frédérique Dufour, is leaving to become chief executive of Rolex. “It’s important to us to develop the El Primero calibre, which is the backbone of the company. And we want to recruit new customers.”
Watches featuring the new three-hand movement – called Zenith Calibre 3000 and produced and assembled by Swiss movement manufacturing company Sellita – will cost significantly less than those powered by Zenith’s in-house equivalent, the Elite calibre. This, the brand believes, will attract new customers and contribute to a spike in sales currently stifled by a lack of capacity.
In the five years since Mr Dufour took the helm at Zenith and following a SFr20m ($22m) investment in the company’s manufacturing base, the brand’s annual output has increased from 8,000 to 50,000 movements a year. About 10,000 of those movements are passed to fellow LVMH Group brands Bulgari, TAG Heuer, Chaumet and Dior. To increase significantly the number of watches it can bring to market, Zenith says it now needs to look elsewhere.
In addition to appealing to a more price-conscious consumer, Zenith believes watches fuelled by Calibre 3000 will draw in consumers less concerned by traditional watchmaking. “It means we can talk to customers who may be less aware of the manufacture aspect and care less about it,” says Ms North.
Zenith says it is making no attempt to hide the fact the new movement is a rebranded version of Sellita’s SW300 calibre, although models carrying Calibre 3000 have solid rather than transparent case backs (another cost-saving measure), and there is no disclaimer on the brand’s website.
Not that Zenith is obliged to declare the genesis of its movements – the practice of renaming outsourced calibres is common in the watch industry.
Under the deal, Sellita will supply Zenith with fully assembled movements, which are encased and passed through quality control in Zenith’s workshops. Zenith declined to comment on the quantity of movements it has committed to buy, or on how much it is investing in the strategy.
Prices for watches with the Calibre 3000 will start from £2,200, some £1,600 less than entry-level Elite models. As Zenith looks to pour resources into developing the El Primero, one casualty of the move may be the Elite movement itself.
Mr Dufour has been quoted announcing the demise of the calibre introduced in 1994, one of the first in the industry to be designed using CAD technology, but sources have been unable to confirm whether the strategy would be retained by Mr Dufour’s successor, Aldo Magada, former chief executive of Gucci Group Watches.
Zenith’s volte-face may have an impact on its brand positioning and perceptions. Currently, Zenith markets itself as a traditional movement manufacturer that has made more than 600 calibres during its history and been awarded 2,333 prizes for chronometry. “At the moment, Zenith is the industry’s best-kept secret,” says Ms North. “It’s time for it to grow into a big business.”
Her point is not lost on industry observers. Timothy Barber, editor of specialist watch magazine QP, says: “Insiders value Zenith as a historic manufacture brand famous for precision and particularly for its El Primero movement. But Zenith has struggled to get that message out more broadly, because it doesn’t have the impact of say Omega or TAG Heuer.
“It’s a respectable Swiss brand that is a classy alternative to the big boys, but relatively anonymous. So, while watch-educated people may mourn its true manufacture status, they arguably aren’t its future core audience. To grow, Zenith needs to reach an audience for whom manufacture status is less of a concern.”
Much of that growth is expected to come in emerging markets, where accessibly priced, time-only luxury watches are considerably more popular than chronographs. Zenith’s Swiss heritage has already won fans in economies where the watch market has experienced rapid recent growth, particularly China, around which the brand has based its pricing strategy.
“Mr Dufour saw that China’s buying power wouldn’t last for ever, so he kept prices at a reasonable level,” says Ms North. “By contrast, some of our competitors are suffering because they put all their eggs in one basket.
“Going in-house and positioning your brand at double the price point doesn’t necessarily succeed. Some have done it and it’s worked; for other brands, it hasn’t, and they’re having to bring their prices down.”
Zenith’s new direction suggests the influence of Jean-Claude Biver, LVMH Group’s head of watches and former Hublot chairman, is already kicking in. LVMH hopes Mr Biver can propel Zenith to global recognition as he did Hublot while serving as its chief executive during the 2000s.
Ms North says: “Mr Dufour has done a huge job with repositioning the collection, telling people that Zenith exists and taking it back to its true values. Mr Biver is going to add to this, allowing the company to expand.”
Zenith’s status as a traditional or purist brand seems likely to change, but it is confident that in doing so it will become a more successful business. It also believes it won’t be the last to adopt the strategy.
“Unless brands can produce in-house movements at an affordable price that makes commercial sense to the end consumer, they will have to [follow us],” says Ms North.
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I'd agree it's a step backwards, but they are trying to target the "Hublot" buyers, not people that care about watchmaking. Their manufacture strategy I guess hasn't moved the needle for them so they are going the marketing strategy.