What if We’re All Wrong about Apple Watch Pricing?

Tim Cook has said:

Apple Watch starts at $349

In the latest episode of The Committed podcast, we discussed the Apple Watch, and mentioned the fact that the “Apple Watch” is a difficult name; not the product line, but that mid-range stainless steel model. We called the episode “Without Modifie,” to reflect the fact that, when discussing the watch, we needed to add a word when specifically referring to that model. It leads to confusion, and perhaps Cook’s pricing statement is also misleading everyone.

My pricing predictions, and those of most people, are based on the assumption that the Apple Watch Sport, which is clearly the least expensive model, will cost $349. But what if we’re all wrong? What if this means that the Apple Watch (tout court; the stainless steel version) is the $349 model? In this case, one could imagine the aluminum Apple Watch Sport costing, say, $199, and being a truly affordable new device that would get much faster uptake.

Just a thought…

Some (Almost) Final Thoughts on the Apple Watch

Apple watchNot since the iPhone was launched in 2007 have we known so much about a new Apple product before its launch, and, at the same time, so little. Like the iPhone, the Apple Watch was announced well in advance of its launch because it needs FCC approval. So the pre-announcement showed what the device looks like, and discussed some of what it will do, but little more than that.

Following the announcement in September, journalists were able to hold, and even briefly wear, Apple Watches, but there were simulacra of the real thing. These Potemkin watches had the same shape and size, but none of the internals were finished. The graphics they displayed were just stills showing how certain features might look.

It’s quite interesting to speculate about this product. It’s a new product category, not just for Apple, but for the entire tech industry. (Yes, there are other smart watches, but none of them have anywhere near the feature set as the Apple Watch.) Just as the iPhone took some ideas from an existing product and developed them into a new device, the Apple Watch will do the same thing.

Pricing is one of the big unknowns. I’ve made my predictions, but others are aiming much higher. John Gruber thinks that the Apple Watch Edition will cost more than $10,000, while Marco Arment suggests a lower price at the high end, but also thinks, as I do, that:

“Apple can’t sell it to them at a truly ridiculous price without alienating their base. A $10,000–20,000 starting price would make the Edition relatively affordable compared to many gold watches but ludicrously out of reach for most iPhone owners, possibily alienating millions of Apple customers and tarnishing their image with all of the snobbery and exclusion that comes with the world of five-figure watches.”

Of course, we may all be wrong.

And then there’s the gold. Dr. Drang examined Apple’s patent for a new way of making a gold alloy, which is technically a metal matrix composite, which could contain as little as 28% gold. There’s some interesting trickery going on here. Gold karats are based on weight (or, more technically, mass), and the fact that they are using a low-density ceramic (boron carbide) means that they can offset the weight of the gold, which should be 75% of the total, with the higher volume of the boron carbide.

In other words, the ceramic used in the matrix takes up much more space than the gold, making the matrix itself lighter than if it were all metal. As such, less gold is needed for the same volume as would be used if it were a simple alloy. At least that’s how I understand all this…

This can keep the price of the Apple Watch Edition down, since less gold is used, and may give me a better chance of winning the Apple Watch bet with Dave Mark.

However, I can hear the word “GoldGate” already. Unless the Apple Watch Edition is priced “affordably” – for a gold watch – I can imagine, and would understand, accusations that Apple is using trickery to label the watch 18K gold. I would assume that Apple has their ammunition ready, but this could mar the launch of the Apple Watch.

I asked people if they thought the Apple Watch was attractive. Granted, this is only based on the pictures on Apple’s website; it will be different once you see it in purpose. But only 58% of people (at the time of this writing) said yes, with 42% – me included – saying no.

So, at the time of this writing, there’s a little more than 24 hours before Tim Cook goes on stage to present the Apple Watch. Just as with the iPhone, this will be a pivotal product for Apple. If it succeeds, it will essentially create a new product category; if it fails, it will be Apple’s first marquee failure in recent times. And what if it ends up being just “a hobby” like the Apple TV? We’ll have a better idea tomorrow, and in the coming months.

Quick Poll: Do You Think the Apple Watch is Attractive? Yes or No?

A lot has been written about how Apple is targeting the “fashion market” with the Apple Watch. There have been ads in fashion magazines, such as Vogue and others, and the gold version of the watch is targeting the monied. (Even though it’s exactly the same watch, just in a gold body.)

I find that a lot of luxury items are not very attractive: Louis Vuitton bags, Hermès scarves, Burberry raincoats, etc.; all these seem, to me, to be nothing more than logos. But I’m not the demographic who buys something for its logo; I usually buy clothes and shoes that don’t have logos on purpose.

If you buy an Apple Watch, it’s more for what it does, for its usefulness as a gadget. But if you wear one on your wrist, you still want something that doesn’t look bad. (And this is independent of the pricing, which is still unknown, though I’ve made some predictions.)

So, do you think the Apple Watch is attractive? Am I alone in thinking that it’s clunky, and doesn’t look at all like jewelry? Or am I missing the point?

[poll id=”5″]

How Many Models? The Apple Watch Conundrum

In conversations I’ve had recently about the Apple Watch, a number of people express the belief that Apple will sell dozens of different Apple Watch models. Since the Apple Watch will come in three different models, each with two colors, and each with a number of different bands, some people think that Apple will have individual models (or SKUs) for each combination.

Apple has done similar things in the past. They’ve sold iMacs in different colors, and iPods have long been available in a range of colors as well. Currently, the iPhone and iPad are available in three different colors, and in a number of configurations (different storage capacities, and with or without cellular support for the iPad). And the iPod touch, nano and shuffle come in, respectively, five, seven and seven colors, though each model has only one capacity.

So what will happen with the Apple Watch? Let’s start with what we know will be the least expensive model, the Apple Watch Sport. It will be available in two colors (silver and space gray), and with five different colored watchbands. It will also come in two sizes. So that makes, just for the Apple Watch, 20 different combinations.

The plain, mid-range Apple Watch will have six watchbands, together with two colors and two sizes, making 24 different combinations.

And the Apple Watch Edition will be in two colors, two sizes, but an unknown number of bands. On the web page for the Apple Watch Edition, you can see photos of different colored watchbands, many of which are specific to the Apple Watch Edition (because of gold buckles, for example), but Apple doesn’t say how many bands will be available. They do mention “six uniquely elegant expressions of Apple Watch,” but only show five watchbands. So, six “expressions,” times two colors times two sizes, equals another 24 combinations. They don’t show any gold watchbands, and I would expect there to be a couple of them, in addition to the leather and plastic bands.

If you add other bands, which Apple has probably not mentioned, there may be as many as 100 combinations or more. Even with the above, I get a total of 68 combinations. Can we expect Apple Stores to stock them all? I don’t think so. I think Apple will either sell the watch body separately from the band – when you buy an Apple Watch, you choose two items – or will only sell a limited selection in-store, and sell the others online. Managing stock like that is a nightmare, and Apple Stores aren’t really designed for that sort of variety.

In addition, I can imagine that, if the Apple Watch is successful, that watchbands become a coveted accessory, as iPhone cases are now. Assuming Apple allows other companies to sell watchbands (if they have somehow patented or copyrighted the connector), it would be more interesting to buy an Apple Watch with the cheapest band, then go out and buy an add-on watchband that suits your taste.

It will be interesting to see how Apple approaches this from a supply chain perspective. Gauging interest in specific colors and styles isn’t easy, especially for a totally new product line.

Do you think the Apple Watch is attractive? I’ve set up a poll asking that question.

Apple Watch Pricing: My Predictions

Apple watch three models

There has been a lot of speculation about the prices of the soon-to-be-announced Apple Watch. We know that the Apple Watch Sport will start at $349, but have no idea about the prices of the other models. Some people are speculating that the Apple Watch edition will cost $10,000, or even $20,000. I don’t think so.

Here are my predictions for prices for the Apple Watch.

• Apple Watch Sport: We already know that this model will start at $349. This includes a basic, plastic watchband. It’s not clear whether Apple will charge a different price for each of the two sizes; most people think they will, but I find that a bit odd. It would be, in essence, a sex penalty: if you’re a man, with a larger wrist, you’re likely to buy the larger model. Should you have to pay more? If there is a difference in price between the two sizes, I don’t think it will be more than $50, so the larger model would cost $399.

• Apple Watch: The middle of the line Apple Watch differs from the Apple Watch Sport in its casing (stainless steel vs. aluminum), and its crystal (sapphire vs. glass). As such, it will be more expensive. But I think it will come in at under $500. Again, it’s not clear whether the two sizes will be priced differently, but, if they are, think $499/$549. However, I assume that the base model will come with a plastic watchband; others will be add-ons. Expect watchbands to start at $100, and maybe cost several hundred for the fanciest ones.

• Apple Watch Edition: This is where there’s a lot of speculation. Apple is clearly targeting the luxury market with this watch, advertising in magazines like Vogue, and planning (according to rumors or leaks) pop-up shops in major department stores. However, there’s nothing special about the Apple Watch Edition, other than its gold case, and what seems to be a stock leather band.

The Apple Watch Edition is not a luxury watch; it’s just a gold-cased version of the cheaper watch. There’s nothing exclusive about it, nothing special. It’s not like more expensive watches where you pay for complex machinery. Yes, there is gold; that will make it more expensive than the other models. But not that much. Estimates of the cost of the gold suggest that the metal would cost less than $1,000.

As such, I think the list price for the base model Apple Watch Edition will be $1,999. There will certainly be a price differential by size, and it could be a couple hundred dollars for this version. In addition, the watchbands will cost as much as several hundred dollars. There’s just no reason to pay more. I repeat, this is not a luxury watch; this is a smartwatch with a gold case.

So, to sum up, here are my predictions:

Apple Watch Sport: $349/$399

Apple Watch: $499/$549

Apple Watch Edition: $1,999/$2,199

Do you think the Apple Watch is attractive? I’ve set up a poll asking that question.

Thoughts On Apple Watch Upgradability

A number of people have been speculating recently about the upgradability of the Apple Watch, the idea that Apple may offer upgrades to the internals of the devices. (The Loop, Daring Fireball, iMore, The Mac Observer) But all these articles have focused on the expensive, 18-karat gold Apple Watch Edition. It seems almost obvious that Apple will offer an upgrade path for this watch, which may cost $10,000 or more.

But what about other models? If Apple can offer upgrades for one Apple Watch, there’s no reason why they can’t offer them for all models. The internals will all be the same; only the metal bodies of the watches will be different.

So, what if Apple announced the Apple Watch on March 9, explaining that it will be upgradable, for all models? This would make it much easier to sell a product that many people aren’t sure they need. While the $349 Sport version of the Apple Watch isn’t expensive for a tech gadget, the mid-range model could sell for anything from $500 to $1,000. (Remember, it’s not just the watch you’re buying. Unless you choose the cheap plastic watchband – available on the Apple Watch Sport and the mid-range Apple Watch – you’ll be shelling out extra cash for a leather or stainless steel watchband.)

At these prices, users would be much more comfortable knowing that there is an upgrade path, so that future versions of the internals could replace what they have for a nominal fee. Apple could use this to possibly convince more users to take a chance on the Apple Watch, since many people will see this as an expensive device with a short life.

We’ve grown accustomed to the fact that Apple devices aren’t upgradable. Perhaps the Apple Watch will be the first device that is.

Do you think the Apple Watch is attractive? I’ve set up a poll asking that question.

Why the Apple Watch Can’t Be Very Thin

Reading the recent New Yorker profile of Jony Ive, I realized something about the Apple Watch.

“Ive places the new watch in a history of milestone Apple products that were made possible by novel input devices: Mac and mouse; iPod and click wheel; iPhone and multitouch. A ridged knob on the watch’s right side–the Digital Crown–took its form, and its name, from traditional watchmaking. The watch was always expected to include a new technology that had long been in development at Apple: a touchscreen that sensed how hard a finger was pressing it. (A press and a tap could then have different meanings, like a click and a double-click.) But the Digital Crown, a device for zooming that compensated for the difficulty of pinching or spreading fingers on a tiny screen, was ordered up by the studio. In a reverse of “skinning,” Ive asked Apple’s engineers to make it. In time, the crown’s role grew to include scrolling through lists.”

I realized that the Apple Watch can’t be very thin. Unlike a watch that you wind once a day, where you can either take the watch off to wind it, or pull it away from your wrist to grasp the crown, you need access to the digital crown all the time. As such, there has to be enough room under the digital crown to be able to grasp it.

Apple watch digital crown2

As you can see in the photo of the Apple Watch, the device is fairly thick, partly because the body itself is thick, and partly because of the sensors that protrude underneath the body. Unlike the iPad and MacBook Air, Apple will be limited in the device’s thickness, in part, because of the digital crown. Not only because of its diameter – it’s much larger than the crown of a watch – but by the fact that you need to be able to turn it comfortably, at any time. You can see that the digital crown is not centered according to the thickness of the watch; it’s a bit higher than the center line, because you need to be able to get a finger underneath it.

Apple will certainly be able to make a smaller digital crown, but there will still have to be enough leeway to be able to use it.

So, while the first Apple Watch certainly looks clunky, I don’t think we can expect a radically thinner model in the foreseeable future, at least as long as the digital crown is one of the main ways of interacting with the device.

What Do You Do When Your Solid Gold Apple Watch Is Obsolete?

On last week’s episode of The Committed Podcast, Ian, Rob and I were speculating on the prices of the Apple Watch when it is finally released. We know the base price of the sport model, with the plastic watchband: $349. But for the others, not a clue.

My guess for the solid gold watch was a bit lower than theirs, but other people have speculated even higher prices. My thought was that Apple couldn’t see a gold watch at a high price if it becomes obsolete in a year. People who pay for premium watches keep them for a lifetime, and pass them on to their children or grandchildren.

The thought had crossed my mind that they might be upgradable. Imagine that, if the high-end Apple Watch costs, say, $10,000, you can upgrade it with future internal models for a few hundred dollars. (I see that John Gruber is suggesting this as well.)

But there’s a problem with this idea: it suggests that Apple will never change the form factor of the watch, that it will always have the same shape and size. And it’s a pretty fair bet that future models will be thinner, and may have slightly different shapes.

The upgrade idea might wore for a few generations, but it wouldn’t be a long-term possibility. Maybe Apple will let you trade in their watches, for new models; Apple could melt down the gold and use it for new watches. Because one thing about luxury watches is their style; it’s pretty much frozen in a style that will live on for decades without looking outmoded. The Apple Watch we’ve seen so far will probably look like the first iPods when compared with new models in 5 years or so.

Apple has to balance two competing concepts with the Apple Watch: the need for tech devices that are useful, and that can evolve as their capabilities expand, and the need for a device that people want to keep for a long time. Having a luxury model prevents the company from treating this product family as they treat iPods and iWatches. The more expense the high-end Apple Watch, the more tension there will be between these two concepts.