One thing that sounded odd at the unveiling of Apple Watch last September was the way they introduced the three different collections. If you watch the video with the Jony Ive voiceover, you’ll see what I mean. First, Apple Watch. Then Apple Watch Sport. Then Apple Watch Edition.
Notice they didn’t present them in the order of price, as we all know by now that Apple Watch Sport will be the “cheap” option, and the Edition, being made of gold, will be the priciest. But rather, they introduced Apple Watch first, and then the other two, as if the latter two were both variations of the canonical Apple Watch collection.
I didn’t get why Apple Watch collection didn’t get its own separate name and why it was presented first until I thought about it in terms of brand identity. Clearly, Apple Watch is the one Apple wants most people to buy.
Sport is obviously for the athletic-minded (and those unwilling to spend $1k+ on a watch, of course.) They will sell tons of these, I’m sure, and the low entry price will help grab lots of customers who otherwise wouldn’t indulge in such a device. In two or three years, perhaps, they will upgrade to the better versions. But if most people buy this collection, I think Apple will actually be in trouble. The margins on Sport have to be pretty thin.
Edition is meant as a super-high, almost unattainable fashion statement. I completely believe the estimates of several watch journalists and John Gruber when they guess the price of Edition at $10k-$20k. Almost none of us “regular” people will make the leap to that high a price, but this is the watch that George Clooney will be wearing. It’s the status symbol. Apple will sell plenty of them, don’t get me wrong. But not nearly as many as the other two collections.
And that leaves the stainless steel collection. The one with the most options. The one they show off most in pictures and videos. The one that doesn’t need a name. It’s simply Apple Watch. This is the one that will make or break the device’s success.
And it’s subsequently the one that’s hardest to guess at, in terms of price.
On the one hand, as Allen Pike pointed out on Twitter, the stainless steel version could technically be as cheap if not cheaper to produce than the aluminum Sport collection.
@gruber Yes. Steel, though, is cheaper than aluminum, and industrial sapphire isn’t pricey. $1k for the stainless model seems bananas to me.
— Allen Pike (@apike) February 18, 2015
But we all know that Apple’s middle-tier products are never priced according to the cost of materials. (And neither are watches, coincidentally.) We also know that Apple loves its high margins. Get them into the store with the “good” product, show them the “best” product to let them know how much they could be spending, then let them settle on the “better” model.
So how do you price an item somewhere between $350 and $10k? Do you slide up towards the high end and make a bet that more people will be fashion-conscious enough to want the higher status? Or do you price it a bit closer to the low end, hoping to grab more of the people who otherwise would be grabbing Sport models?
I don’t know. A range of $800-$1,500 (roughly what John Gruber most recently predicted) makes a lot of sense to me. It’s pricier enough than the Sport to make it a status symbol, yet not so crazy as to be out of the realm of what people tend to pay for nicer watches. I certainly don’t see it being any lower than that.
Would they go up to 5k? Somewhere closer to the middle of the two pricing tiers? If they wanted to predominantly sell Sport models, then yes. But as I said in my talk at CocoaLove last October, Apple’s gift is making you feel like you bought a Mercedes when you actually paid the price of a nice Toyota. They want people to give in to that desire to get the better, classier item. And they do that by being just a little more expensive, not a lot more expensive.
But this is a watch, not a computer or a phone. Perhaps all bets are off once we move into the world of fashion?
How much higher Apple drives that stainless steel collection price will be a good indication of how confident Apple is that they can get beyond functionality and appeal to people’s sense of prestige. I believe the plan is to drive as many people up past Sport to Apple Watch as possible, in order to have a much higher ASP. And that means keeping Apple Watch collection closer to 1k than 3 or 4k in my mind. But Apple may know better.
Sure, a price of 1k–1.5k leaves a massive price gap between Apple Watch and Edition. But the more massive that gap, the better for those who would buy a gold watch, anyway.