On the Pricing of Apple Watch
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On the Pricing of Apple Watch
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Re: On the Pricing of Apple Watch
#2I think his $5k estimate is much stronger than his $20k estimate.
An Apple Editions is not a Patek Phillippe. There is a dramatically different replacement cycle which means that any attempt to cut and paste lux strategies is going to either fail entirely, or narrow the market so thoroughly as to be indistinguishable from failure.
Re: On the Pricing of Apple Watch
#3I think his $5k estimate is much stronger than his $20k estimate. An Apple Editions is not a Patek Phillippe. There is a dramatically different replacement cycle which means that any attempt to cut and paste lux strategies is going to either fail entirely, or narrow the market so thoroughly as to be indistinguishable from failure.
That's assuming there's no upgrade story to be told at the launch event.
I agree it would be a little weird coming from the modern Apple, but I just can't see a marketing pitch that sells even a "merely" $5,000 device that's functionally equivalent to a $350 one and essentially guaranteed to be obsolete within 5 years.
Obviously there's a market that can afford to treat such a luxury as disposable, but that doesn't seem like a large enough market to justify creating the Edition line.
They're going to sell these things (at least partially) through upgraded Apple Stores, and presumably those stores will have to offer (possibly off-site) jewelry-like fitting and repair services. How much of an engineering obstacle would it be, really, to guarantee that the next N generations of Watch internals will be able to be retrofitted into the Editions? Probably with a nice markup on the labor, too! After all, if there's one thing they're good at, it's continuous miniaturization.
I think it would dramatically expand the market for the high end models. If it extended down to the stainless tier, I'd certainly buy a much more expensive Gen 1 version.
Re: On the Pricing of Apple Watch
#4I think his $5k estimate is much stronger than his $20k estimate. An Apple Editions is not a Patek Phillippe. There is a dramatically different replacement cycle which means that any attempt to cut and paste lux strategies is going to either fail entirely, or narrow the market so thoroughly as to be indistinguishable from failure.
What if the innards would be upgradable? Or owners could exchange the edition models for a newer model in store paying only a "modest" upgrade fee?
I'd think Apple is aware that the edition models don't follow the one to two year upgrade cycles of a smartphone. So, some kind of investment protection would be necessary.
Re: On the Pricing of Apple Watch
#5There is one massive different with usual watches.
Expensive watches are often sold under the idea you will never have to buy another watch, and neither will your children, or your children's children. I will reasonably surprised if any new Apple Watch hasn't been made forcibly obsolete by Apple within 5 years or so, and shocked if it is still functional in 10.
Furthermore (and more worrying perhaps for people paying that much money), once a model of Apple Watch comes out with a better CPU, then your watch is no longer the latest-and-greatest, whereas older watches don't have the same degree of last year's begin inferior (of course, they can still go out of fashion).
Re: On the Pricing of Apple Watch
#6I think his $5k estimate is much stronger than his $20k estimate. An Apple Editions is not a Patek Phillippe. There is a dramatically different replacement cycle which means that any attempt to cut and paste lux strategies is going to either fail entirely, or narrow the market so thoroughly as to be indistinguishable from failure.
That's assuming there's no upgrade story to be told at the launch event. I agree it would be a little weird coming from the modern Apple, but I just can't see a marketing pitch that sells even a "merely" $5,000 device that's functionally equivalent to a $350 one and essentially guaranteed to be obsolete within 5 years. Obviously there's a market that can afford to treat such a luxury as disposable, but that doesn't s…
Or the watches will have significant trade-in value because they can ditch the electronics and melt down the gold.
Re: On the Pricing of Apple Watch
#7There is one massive different with usual watches. Expensive watches are often sold under the idea you will never have to buy another watch, and neither will your children, or your children's children. I will reasonably surprised if any new Apple Watch hasn't been made forcibly obsolete by Apple within 5 years or so, and shocked if it is still functional in 10. Furthermore (and more worrying perhaps for people paying…
Yes, exactly, this seems so obvious that I don't understand why Gruber is ignoring it.
The iWatch will be obsolete in 24 months at most (less if you are the type who values status and want a "$20,000" watch as the next model will probably come out 12-18 months later)
Maybe there are enough uber-rich people that are ok buying $20,000 watches every year, but that seems like a really, really small market.
Then again, maybe the bands will remain the same, so if the primary investment is in the band, then that could last a bit longer. Even then I'd expect that every 2-3 years they will have a form factor switch that will make all previous bands obsolete.
We'll see.
Re: On the Pricing of Apple Watch
#8It could happen, but that would be very aggressive and experimental. The perfect watch, the Rolex GMT, has a base price of about 8k in steel, and goes for about 26k in 18k gold, for a 3.5x multiple[1]. (Ignore diamonds, etc. Not relevant to this discussion.)
So a 10x multiple on plain 18k gold over steel would be quite aggressive. And I don't know of any other watch where the exact same base watch is available at 25x less from plain 18k gold. You can get high-quality swiss movement homages to the GMT at around 1k, but they are clearly different watches and movements.
Apple has of course done their homework on it and I have no understanding of the asian market, but if the pricing is that aggressive I would be surprised, particularly with the android competition.
Re: On the Pricing of Apple Watch
#9There is one massive different with usual watches. Expensive watches are often sold under the idea you will never have to buy another watch, and neither will your children, or your children's children. I will reasonably surprised if any new Apple Watch hasn't been made forcibly obsolete by Apple within 5 years or so, and shocked if it is still functional in 10. Furthermore (and more worrying perhaps for people paying…
Yes, exactly, this seems so obvious that I don't understand why Gruber is ignoring it. The iWatch will be obsolete in 24 months at most (less if you are the type who values status and want a "$20,000" watch as the next model will probably come out 12-18 months later) Maybe there are enough uber-rich people that are ok buying $20,000 watches every year, but that seems like a really, really small market. Then again, ma…
In Apple's models there has to be enough people willing to pay that much money for a watch that will likely be made obsolete. That is mind-boggling to me. I have enough friends who have consternations about buying a new phone every two years let alone buying a watch that can be just as expensive to go along with it. Based on my personal experience I bet they're relying on the 5%-ers to make this thing work.
Re: On the Pricing of Apple Watch
#10Considering the rapid obsolescence of electronics, why would I put a quickly decaying piece of hardware my wrist? In the luxury/heirloom department, I much prefer high end mechanical wristwatches. Those have an appeal that will last much longer (decades) then quickly outdated hardware (months). I only have to look at the replacement cycle for cell phones, which is already insane.