There’s been plenty of speculation regarding the pricing of the Apple Watch, specifically “Edition”. It’s the premium model that’s available in six different options. The watch case on Edition models are crafted from 18-karat gold. Its display is covering is polished sapphire and there are an assortment of accompanying bands. When you look at some of the most prestigious watch-makers, these sort of materials often command prices that range well above $10,000. People drop what I’d deem an excessive amount of money of brands like Tag Heuer, Breitling and Rolex each and every day. They don’t blink when it comes to purchasing what is a luxury item. You can buy a $20 Timex that tells time and a $20k Tag Heuer will do very much the same. When it comes to technology products, Apple has proven they are capable of selling high margin products at higher prices than their competitors. The luxury watch space is the mother of all high margin items. I’ve seen people suggest the high end Apple Watch will sell for anywhere from $1200 to $20000. If that price ends up going anywhere near $10,000, you’d need to be a certain breed of crazy to buy an Apple Watch Edition at those prices.
When the original iPhone was released, its price was $499 for the 4GB model and $599 for the 8GB model. It was significantly more than a Palm Treo 680 and other smartphones. Palm’s CEO Ed Colligan said that a computer company wasn’t going to figure out how to make a decent phone. At its core, it was a smartphone and one that was 5 years ahead of the competition. It was priced right. People were generally ok with the price, until the price cut in September, 2007 that waged a significant early adopter tax on those among the first to buy an iPhone. There was widespread outrage in our forums and throughout the Internet. With each new product or price cut, there are always going to be a subset of customers that are not happy. It just happens faster with technology.
The Apple Watch is a first generation product. But it isn’t a timepiece, in the traditional sense. The first generation iPhone was a handheld computer and you wouldn’t be far off to call this a wearable computer. Apple’s own website says it is “unlike any device we’ve every made.” That seems like a stretch. Everything is scaled down and the experience is completely different that if you were interacting with a phone or a mouse. But ultimately, these are apps and these are extensions of those very same experiences that occur on our phones and computers. Like the iPhone, we’ll tap to launch apps or interact with notifications. The display is even more advanced, being able to sense force from touch. This is made possible by the Taptic Engine. Instead of the home button, the digital crown will play a pivotal role in controlling what happens on the Apple Watch. Built within the Watch is a custom heart rate sensor to help track your physical activity. Powering all of this is Apple’s S1 chipset, which they call “an entire computer on a single chip.”
Before we even look at the exterior of a $10,000 watch, it’s important to take note of the internal components. Years of development have gotten Apple to this point, just months from its release. Is it because they couldn’t figure out how to design a fashionable milanese loop? Did they spend years sourcing 18-karat rose gold? Not likely. This is a tiny computer. The Apple Watch is coming to market because they have been able to develop miniature components needed to manufacture a wearable computer product priced at $350. Typically, when technology products get smaller and more efficient, it comes at a cost. Over time, prices come down and products tend to improve. How does the iPhone 6 compare to the original iPhone? Remember, those $600 iPhones were with a new contract. Apple made incredible improvements to both the iPhone and iPad in their respective second generation releases. Can you imagine what will happen to the impossibly small components and sensors in the Apple Watch in the second generation product? Would you feel comfortable knowing that your $10k watch will be slower, less capable in a year’s time? Not only compared to the next Edition, but it will be outpaced by the second-gen Sport model. An old Lamborghini will always beat a newer Ford. An old Breitling will function like a new one. That won’t be the case with Apple Watch.
I’ve seen the argument that people spending thousands of dollars on an Apple Watch are doing so to make a fashion statement. There is a palpable difference between investing in a classic timepiece and a smartwatch. I haven’t seen Apple use this term on their website, likely for the fear they’ll get lumped in with the others, but this is a computer strapped to your wrist. Is a year old Rolex isn’t going to be radically thinner? I don’t know with any certainty that the Apple Watch won’t retain its somewhat chunky looking chassis? If I were a betting man, I’d be cautious about $350, let alone $10,000.
Without knowing the pricing, I suspect they may toe the line between the luxury market and someone looking at the watch as a must-have iPhone accessory. I don’t see Apple pricing this anywhere near $10,000, let alone $20,000. If they do, I’m sure that some folks would buy them. What’s a fair price for a watch that will have outdated technology in a year plus? It’s not about having the disposable income to spend what some would think is an insane amount of cash on a watch. Years ago, before two kids and a mortgage, I spent $2k on a Breitling. I wear it once, maybe twice a year. It still looks fantastic and makes me feel good when I strap it on. It tells time, just like the much less expensive Timex from J.Crew I own that gets worn much more throughout the year. It’s smaller, lighter and more comfortable. In a few months, an Apple Watch will find its way into the rotation, likely dominating it. The Apple Watch Edition is a remarkable feat of technology, wrapped in 18-karat rose gold. At its core, it’s very much a computer. Next year, it’ll likely get thinner, faster and possibly include new sensors that expand its capabilities. And it’ll be available starting at $349. There’s nothing timeless about outdated technology.