In the turbulent world of the watch industry, things don't always go, as it were, like clockwork. Competition is stiff, style is often confused with gimmickry and status is increasingly de rigueur. Yet, in this age of fad as fashion, there is still the watch as a classic timepiece. At Patek Philippe in Geneva, they make watches; but watches that bear as little relation to the mechanisms strapped to most wrists as a Rolls Royce has to a simple, serviceable Volkswagen.

It all began in 1839 when a young French watchmaker named Adrien Philippe joined forces with exiled Polish nobleman Count Antoine de Patek. Their decidedly ambitious goal: to make the world's finest watches- better than those of the English and French who dominated the trade at the time, or those of the famed Jura mountaineers in the Vallee de Joux above Geneva.

The two were well matched- Patek something of a super salesman, Philippe a true genius at the craft. Indeed, it was the latter who in 1841 developed the first keyless watch; in 1846 pioneered the independent second hand and free mainspring; and in 1842 was awarded the international patent for the winding crown. Together, Messrs. Patek and Philippe got off to a flying start and raced to the top. Their display, at the Great Exhibition of 1851 in London, not only won press comment and the Gold Medal but two impressive clients- Queen Victoria and Prince Albert.

For the next fifty years, Europe's nobility and the merely rich lined up to buy watches and sign the firm's prestigious Golden Book. In it are about a hundred kings and queens, numerous Russians from Czar Nicholas II to Count Leo Tolstoy. Charles Lindbergh's Patek of 1927 was number 811046, duly noted. Anna, Countess de Noailles, had her pocket model covered with 257 diamonds and twenty-nine rubies, Tchaikovsky and Artur Rubinstein also patronized the house, as did Clark Gable and Albert Einstein.

Today, little has changed at Patek Philippe- not even its location. Its world headquarters still holds pride of place at the center of Geneva's super-fashionable Rue du Rhone. On entering, the visitor is greeted by a pair of elaborately carved and painted eighteenth-century blackamoors bearing torcheres, permanent guards for an ancient safe that is the room's centerpiece. The obligatory atmosphere of privacy and luxe is further emphasized by the tooled-leather walls and the small, ormolu-fitted desks perfect for inspecting potential purchases at leisure.

The visitor is also greeted by a staff of highly trained, multilingual salespeople who answer questions, politely decline the perpetual requests for tours of the factory and who arrange, whenever possible, for the purchaser to return the next day to collect his timepiece. This lapse, allowing for yet a final check-out and preparation, is essential and tacitly understood. (After all, one rarely enters a Rolls-Royce showroom, lays down the cash and leaves behind the wheel.) The overnight delay also allows time for the watch's registration number to be entered in the company records- not only a security precaution but a central part of the repair policy.

Patek owners may rest assured that the company will never refuse to take back one of its watches- no matter how old. Nor need they be concerned with out-of-date parts. If a needed one is more than twenty to thirty years old and not in stock, Patek's craftsmen will remake it themselves. And, because this is Switzerland, of course one can register a purchase in any name- the buyer's, the recipient's, or no name at all.

On the upper floors of the five-story building, the delicate work of fabrication takes place. The 18-karat cases arrive from an ancillary factory, and here the mechanism is put together. Craftsmen in spotless white coats work, chins bent low to touch wood at the master watchmaker's bench, gazing intently through magnifying glasses to polish gold links for a bracelet, or set movements into solid gold cases or cut and pivot wheels for a movements- a process which alone may involve hundreds of distinct operations.

Still, almost half of their time is spent on quality control and finishing. Ask a foreman in the bracelet department whether the quality inspectors are demanding and he'll reply, "Yes, they send pieces back sometimes, but that is how it must be." So, methodically, workers attach, inspect, adjust and perhaps reject at every step along the way. Even after the watch is put in motion, tolerances are checked to within 0.02 millimeters on machines that magnify a part to fifty times its natural size. Then it is further refined and verified until the mechanics fit to tolerances of within 0.01 millimeters. Indeed, some 600 hours of tests are made on every movement: cold, heat, humidity, performance in five different wearing positions. But there is no hurry; nothing will leave the building until it is perfect. That is why clients beat a path to Patek's doors and are willing to wait there.

And occasionally there is a wait. A client may well confront a delay in delivery from three to four months. Patek does not sell out of a giant stock. It produces a mere 11,000 to 13,000 watches per year. If a wait means losing a sale- and from time to time it does- then that is accepted with regret. The company, however, has no plans to speed up production. Says General Manager Philippe Stern, "The cost would be failing to take many other actions which we now do for purely aesthetic reasons, things only a watchmaker would know. Because we have always done these things, at a recent auction one of our forty-year-old pieces with a minute repeater and perpetual calendar sold for 100,000 Swiss francs more than when it was new. We know because we went to buy it back for our own museum here in the Rue du Rhone."

To date, Patek Philippe's museum has quite a number of impressive timepieces comprising a mini-history of the firm. Included are the watch Queen Victoria purchased at the 1851 Exposition; Mme. Curie's; Rudyard Kipling's; the model purchased in 1853 by Empress Eugenie, wife of Napoleon III; the first watch without a key, invented by Adrieti Philippe; and watches once belonging to Richard Wagner (1861), Pope Pius XI (1910) and Pope Leon XIII (1901) among many others.

It is characteristic of Patek Philippe and Philippe Stern that the company does not go to great lengths to publicize its museum. For that matter, it doesn't promote anything through the mass media, as do most other manufacturers. Thus, Patek has no plans to go on television, yet Stern does admit some satisfaction at the spillover effect from the promotional efforts of other competitors.

Basically, the company confines its publicity efforts to twice-annual displays on the premises of selected retailers around the world. On such occasions, Stern or another senior sales executive will visit, seeing prospective customers off the street as well as those especially invited by the hosting jeweler, and the proceedings are carefully conducted, decorous and without hucksterism.

Time marches on, however, and while Patek is able to hold itself somewhat aloof from the masses, it does make an effort to meet the realities of the marketplace- at least partway. One can, for example, pay with a credit card, and the firm does not intervene if a jeweler sells a watch in installments. But even for substantial sales ranged by style and character more than the line is drawn on the matter of discounts. And those retailers whom the firm's agents view as given to unseemly price-cutting do not become or remain Patek's clients.

It is an international business, though, and subject to the vagaries of cultural and economic differences in various countries. Stern takes an overview as he comments, "Hong Kong will haggle, Germany has good prices, and the burden of Prince's new 25 percent tax on luxury items hurts us." Much, too, depends on retailers' markups, a topic the firm prefers not to discuss. It is an open secret, however, that these vary widely from country to country and affect prices even after shipping, duty and tariffs have done their share.

In this age of mass merchandising, Patek's present policy may be seen as something of an anachronism. But it is an anachronism that seems to work. Stern is content with his close contact with a handful of trusted agents for various world markets. As for increasing the share of American sales above 10 percent (a figure that was 40 percent in 1939), he is, as ever, cautious. "I think the best policy is to be more or less equally active in several markets, as the best insurance is spreading the risk," he explains, and goes on to predict that Patek's prices- already the world's highest- will rise, but slowly. "You know," he says, "ten years ago, we thought no one would pay over 3,000 Swiss francs ($1,421) for a strap watch no matter what."

In fact, they have many best-sellers at even higher prices, the most famous of all being the Golden Ellipse, created by chief designer Jean-Daniel Rubeli in 1966. As the name implies, it has a graceful shape somewhere between a rectangle and an oval with rounded corners. In fact, the distinctive shape was derived from the architectural principle of the Golden Section, which also determined the balanced proportions of the Parthenon and Notre Dame. Today, it stands as the firm's international signature. Simplicity is its key, for the minimal design of the Ellipse does not allow for a second hand, nor the thickness necessary for true waterproofing. The face almost invariably shows only dashes for the hours and the inscription "Patek Philippe. Geneve."

Naturally, the Ellipse d'Or, as it's known in Switzerland, is offered in a number of variations: with white-gold or yellow-gold dial or in a blue-gold that is colored (not coated) to five microns in a secret process: with a lizard strap (crocodile anywhere outside the U.S.) or a gold bracelet; mechanical or quartz movements; automatic or self-winding; face aligned with the strap or turned sideways. Counting all its models, it is Patek's overall best-seller, accounting for some 25 to 30 percent of all sales world-wide and priced at about $4,600. In addition to the Ellipse in its sundry versions, Patek's production is grouped into three other lines, with models arranged by style and character more than price and complexity of construction. The Ligne Premiere tends to basics- that is, no precious stones- and includes a Deco design revived from the Thirties. The Nautilus line is Philippe Stern's entry into the elegant sports watch market. Geared to the tastes of the active set, it offers a lock that is massive but "not heavy." Cases are fashioned from single blocks of gold, as is true of all Patek watches, but these are heavy enough to take underwater depths of up to 120 meters.

The 18-karat gold man's Nautilus, with diamond-studded bezel, sells for $24,000, and matching cuff links set with diamonds are offered as well. For a more toned-down look, the Nautilus is also available with its accessories in a combination of gold and stainless steel. And soon it will be available in platinum, to be produced in a mini-series of only twenty at a time and costing more than the gold. This is partly because the metal is more expensive and partly because it takes fully ten times as long to work with platinum. Nevertheless, clients have requested it and Patek has responded.

Lastly, Patek's Joaillerie line, as the name suggests, offers watches that sparkle. It may be no surprise to learn that about half of all ladies' watches bear some diamonds or other gems but, interestingly, 85 percent of all those stones are set by Patek. Still, with discretion the better part of business, the name of the particular heiress, international hostess or royal family member who wears the extravagant Riviere model will never be revealed. Specifications on the watch are more accessible. Listed as "Price on request," it is made of 18-karat yellow gold with thirty-six emerald-cut baguette diamonds set in the case and forty-two more on the bracelet. The dial is paved in diamonds and the hours marked in rubies. It makes an impressive gift.

In recent years the world's watch-buying public has been largely, and increasingly, won over to the wonders of quartz timekeeping. The watch to own seems to have become one which depends on the high-tech performance of something built around electrical impulses-presumably perfect rather than cogs and wheels. For Patek, the use of quartz as a replacement for mechanical technology remains a touchy subject, for it goes to the heart of Patek's image and special edge. Quartz seems to call into question the firm's claim to unique perfection, as well as Patek's apparently stubborn insistence on self-reliance in every aspect of production.

As a compromise, 20 percent of Patek's movements are quartz; but all these movements are made in house. In this way, the firm stays free of sometimes unreliable outside suppliers while satisfying that portion of the public which insists on this technology. Philippe Stern puts the quartz versus mechanical debate into Patek's perspective: "People do not realize it, but the only watches without mechanical parts are the digital ones, which we will never make. Half the parts of a quartz watch are mechanical, and the life of the watch depends on them." Patek's reluctance to join the rush to quartz comes as a veiled warning from Philippe Stern, a statement that reveals just how the firm likes to think of itself: "The problem is, something could go wrong in a quartz assembly in, say, twenty years, and the needed part not be available to anyone, not even to us. Such a dilemma would never occur with a mechanical watch from Patek. We will be here twenty years from now and more."

So, while Stern thinks that half of Patek's production may go to quartz within five years, his heart and head and the hands of the staff remain dedicated to the mechanical, to watches made in the traditional way, which Patek has perfected. The feeling at Rue du Rhone is that to bypass one of their mechanical watches for even the most excellent quartz movement is to miss the point of nearly 150 years of Patek Philippe.

Not all of Patek's achievements are worn on the wrist or carried in the pocket. Some of the most influential are related to industry and come from the Electronics Division. Once made up of but one watchmaker and one electrical engineer, this is now a major division built up by Philippe Stern, who foresaw its potential. Today, it is a world leader in industrial and specialized timekeeping. Soon all Dutch trains, for example, will run to Patek electronic time, just as sailors rely on the "Naviquartz" chronometer's standard-setting accuracy. For that matter, synchronization of a watch at all three Swiss airports, in major Geneva hospitals and within the Vatican is done by taking Patek Electronics' word about what time it is. At the Geneva airport, Patek's installation of "master and slave" electronics drives the system on which all airport functions rely. In the arrivals hall, the center of attention is a stainless steel-encased clock, both conventional and with quartz display, that sets the pace to within hundredths of a second. The text explains in German, French and English that the mechanism is accurate "to a variation of less than one second in three hundred centuries." So much for thinking Patek a maker of expensive frivolities.

In fact, there is absolutely nothing frivolous about anything at Patek Philippe. Every operation is executed with a concentration and industry worthy of a surgeon. Of course, there is the obvious luxury: gold dials and bracelets, gems, thinness and polish. But what really sets the house apart is not so easily seen. Without fanfare, Patek plays a historic role in its field as the sole surviving firm that has mastered and maintained the seven crucial crafts of traditional watchmaking.

It alone employs the antique skills of the few remaining graduates of the Geneva school of enamelers that once set the European standard. Today, only Patek Philippe will take an order for a hand-painted enamel dial or a case painted with a miniature scene of the customer's choice. And only here can one be assured of work so fine that the craftsman will, if necessary, literally pluck a hair from his own head to ensure the most exquisite detailing. In addition to the enamelers, Patek craftsmen include designers as skilled at the workbench as at the drawing board. Trained as both artists and jewelers, they design movements by making hundreds of technical drawings at twenty-times scale, using dozens of machines and about 600 hours to devise a mechanism of from 120 to 870 parts. Designers are involved in every stage of development from the initial sketch, and work with each technician along the way.

The watchmakers, honored with the title horlogers complets, practice skills acquired through four years of special schooling even before starting lengthy apprenticeships within Patek. Small wonder they are all-important to the system, and it is their contribution that Philippe Stern holds up as a comparison between Patek and other luxury watch companies. "Others make good watches," he says, "but really only see them as carriers for precious stones. The dials are designed to sell the diamonds." At Patek, he continues, while decoration has its important place, the quality of the movement comes first. "First we make a beautiful movement," says Stern, "and then we dress it." Philippe Stern would resist unraveling a carefully created professional knot, but if forced to rank them would probably place the horloger compact above the bijoutier in the company's priorities.

Also crucial to the whole is the craft of the goldsmiths, who work with hammers and anvils in ways unchanged since the sixteenth century as jewelry makers, case makers, jewel setters and polishers. Some specialists of the group, called guillocheurs, operate the 100-year-old rose-engines that put delicate barleycorn patterns on watchcase rims, or hobnail designs on bracelets.

Then, too, there are chainsmiths whose eight years of training allow them to use only fine pliers to draw out gold wire, cut, shape and engrave each link, and plait, mesh and polish every bracelet. Each bracelet is then hand-polished a total of twelve times and assembled through holes made by a hand-turned drill. Because each is created entirely by hand, no two are exactly alike.

Patek's engravers are the ones who chase and cut into the gold, creating raised and repousse designs and bas-relief sculptures on watch cases mere millimeters thick. Each trains first as an artist, then apprentices with a master engraver.

Finally, there are the jewelers, masters of their own art, gemologists who are uniquely accomplished in the combining of precious stones and at cutting them to any shape needed. Taken together, these seven crafts constitute a living museum that serves a contemporary marketplace.

Patek Philippe's marketplace is global. It sells to the public in hundreds of stores and on every continent. But it also knows how to proceed discreetly in those quiet quarters where a personal visit is required, appointments are made through intermediaries and tacit understandings arise between manufacturer-craftsman-merchant and client-connoisseur-collector. Chief designer Rubeli has been asked to fashion watches that, as nearly as is feasible, are made only of diamonds. Asked to name the purchasers, he only smiles and refers to them as "princes of the desert."

Other clients, less anonymous though quite as well-heeled, have also required the personal attention of the company for requests not offered in the catalog. Consider the Texan who bought a watch for himself and for each of his twenty-five favorite friends- all specially made so that every number on the dial was a "5," the perpetual cocktail hour. Then there was the late Maurice Chevalier, who summoned Rubeli to St. Moritz and commissioned an emerald and diamond Patek to match cufflinks given him by Edith Piaf. Patek has also enjoyed the patronage of Mel Blanc (Donald Duck's voice, and a watch collector), country singer Johnny Cash and a host of Jakarta oil millionaires whose insatiable appetite for Pateks has helped make sales in Indonesia, Malaysia and Singapore equal to those in America.

Perhaps because, at Patek Philippe, every product is given special attention, there is something doubly intriguing about what they call their special departments. There is, for example, the section termed- with no irony intended- Complicated Watches. Here, timepieces are crafted to order: watches that can report the hour 5:59 by chiming one bell five times for the hours, three times on other chimes for the three quarter-hours and fourteen high-pitched rings for the minutes. The parts number about 600, the buyers are mostly Arabs, and the price is now $100,000. ($65,000 for the old version; $100,000 for the new version). If that seems a bit steep, you can own a Patek skeleton watch, which allows you to view the inner workings through a glass case made of ultra-thin yellow-gold set with diamonds, for a mere 45,000 Swiss francs ($29,500).

But all of these pale beside the timepiece commissioned in the 1920s by an American named Henry Graves Jr. Encased in a double-sided pocket watch 3.5 centimeters thick, it is an alarm clock, stopwatch, celestial chart of the constellations over New York, chronograph, repeater that strikes the hours, quarters and minutes with different carillons, a perpetual calendar, reporter of sunrise and sunset and much more. It took Patek Philippe five years to design and produce, and it is considered one of the wonders of the watchmaking world.

It is no surprise to Patek Philippe that the one who commissioned such a watch should have been an American, Americans being people who traditionally have sought the most information possible in the least space possible. It is they, too, who,make up the biggest market for the Perpetual Chronograph. This model not only tells the day, date, month, hour and phases of the moon, but reports the year as 1, 2, or 3, with a red dot to signify leap year. It is available in automatic and stem-winding versions and starts at 19,500 Swiss francs ($21,000). Customers for this model may need patience (albeit not as much as Mr. Graves), for only ten to twelve are made in a year.

Perhaps the greatest wonder, however, is that all of this opulence and creativity emanates from a company with barely 400 employees; less of a wonder, though, when one considers the sense of dedication and commitment here which may well be attributed to the fact that Patek today is a family business. In fact, it is entirely in the hands of two men, father and son. Head of the business is Henri Stern, an active and involved 71, who inherited the firm from his father, Charles, who had purchased the firm with his brother in 1929. Young Henri was dispatched to New York to oversee American distribution. He proved a brilliant salesman, taking Patek into new markets and expanding U.S. sales; he also fell in love with fine watchmaking a la Patek. Henri returned to Geneva in 1958 to take over production. By the time he passed daily control to his son Philippe (who had served a ten-year apprenticeship in the firm) in 1977, Patek could boast modern, profitable marketing as well as a grand luxe manufactory. Only both could have permitted the firm to survive the tumultuous arrival of the Japanese competition, which undid other famous names in both American and Swiss watchmaking. Philippe today regards the competition with a certain equanimity- from a safe niche in the market: "The Japanese would have to make a prohibitively great investment to create mechanical watches at our level," says Philippe Stern. And, while others have been hit very hard by the onslaught of less expensive models, Patek seems immune.

Philippe, as general manager, has day-today control of the firm. Handsome and athletic at 44, he combines a Swiss business school background with the kind of passionate belief in his product that only happens when a third generation chooses the family business after having tried other things. No doubt his standards would satisfy the founders; they probably would also send shudders through a professional manager worried about short-term effects on the balance sheet.

However, while he has done much to further Patek in the personal and industrial marketplace, it is characteristic of Philippe & single-minded dedication to his watches that he resists most ideas for diversification. Thus, he has no plans to make a perfume or leather-goods line, no strategy to create Patek fountain pens or cigarette lighters. Well, occasionally a table-model lighter goes on display in the showroom, an object whose design would be worthy of note even if it didn't generate a flame. And there are the cuff links and rings, matching key chains (18-karat, of course) that make sets with the Nautilus and Ellipse lines.

And perhaps he saw some merit in the production of expensive silk scarves as a small, portable prestige item that would carry Patek's name in the right company- its clients and would-be clients. The scarves are made of crepe-de-chine in the factory that produces for Hermes, are priced at $100 to $200, and are quietly displayed in one corner of the Geneva showroom. All rather restrained, and rather Patek.

Also rather Philippe Stern. Unlike many international executives of his level, Stern leads a very private life. He does not frequent the charity ball circuit. Neither does the company sponsor sports events or lend its name to tennis matches, tournaments, regattas or play-offs as the official timekeeper; Stern doesn't believe in it.

Outside his business, and kept clear of it, is his passion for sailing. Well-known captain of the 34-foot boat series called Altair, he frequently races with a crew of four. Several times he has also won the coveted Bal d'Or in the important June regatta on Lake Geneva.

Sailing and sharing the enthusiasm of his German-born wife for breeding Greenland dogs for sled-racing have supplanted his former love skiing. Once, he was not only a member of the Swiss National Ski Team but University World Ski Champion in 1961. When a serious injury in the World Championships at Chamonix in 1961 ended his ski days, he displayed sportsmanlike resilience by simply turning to another sport and rising to the top in it. It is a persistent, upbeat and flexible attitude that carries into his work as well.

And the flexibility is crucial, for, as Stern well knows, the world in which Patek now operates has changed, perhaps in terms of the retailer and the public more than the watchmaker. But all are affected. Werner Sonn, Patek's man-in-charge in New York, responsible for relations between Geneva and the approximately eighty American retailers, explains the change. A veteran of almost forty years in the business, he laments the demise of the family-owned jewelry store where the staff knew the product and the management knew the clientele.

Today, Patek operates in a world of conglomerates, of impersonality. Not that they have suffered. On the contrary: working with conglomerates boosts sales figures and- economic hardships notwithstanding- luxury watches are selling. It is only that the styles have altered around Patek. Business relationships are different now than in the days when commerce stayed within a familiar carriage trade. Take the case of the century-old pocket watch that came to Geneva for repair. Inside the case was engraved the name Bailey, Banks and Biddle, the superior Philadelphia jeweler. The watch will emerge from Patek's workshops as though time had never touched it, as indeed it seems not to have touched Patek. But the retail store, still a Patek customer, is now part of a, giant consumer goods conglomerate.

If these stores changed, it was because the public did, and this also had an impact on Patek. Says Stern, "When I first went to work in my father's agency in New York, I visited with a senior American executive who thought a watch was anything that could tell the time. A big car was more important, or a fur coat for his wife. All that has changed." He believes that people who appreciate value in an exquisite watch are growing more numerous every day, and while some buy Patek simply because it is expensive, many more do so because they want something that stands out in every way from the world of the mass-produced. "People have a secret desire to be different from others," he notes.