Apple is not selling a smartwatch

“Tim Cook’s upcoming move to take over your wrist is not a smartwatch, even if it loosely fits the definitions that the geekerati have been working with over the last few years. Instead, the Apple Watch is an idea; it is status and standing; it is aspiration and achievement,” Ewan Spence reports for Forbes. “To borrow another marketing phrase, this is not just a watch, this is an Apple Watch.”

“Much like the launch of the first iPhone, Apple debuted the Apple Watch more than half a year before its general availability. Apple stayed in control of the message of the watch, rather than allowing the supply chain to leak each function component by component,” Spence reports. “It allowed Apple to position the watch as a fashion accessory and to show it of during Paris Fashion Week, on the wrists of supermodels, and in the glossies around the world. It gave people time to appreciate that the Apple Watch is about more than seeing your notifications on your wrist, counting your steps, or sending your heartbeat to your partner.”

Spence reports, “Once the Apple Watch goes on sale, I think we will all see that Tim Cook is not selling a smartwatch, but instead is selling status.”

Read more in the full article here.

MacDailyNews Take: Nowhere on Apple’s Apple Watch site is the word “smartwatch” used.

Related articles:
Gruber: Apple Watch Edition will cost $10,000-$20,000 – February 20, 2015
Apple Watch Edition will cost at least $5,000, probably much more – February 19, 2015
Will you pay $4000 or more for the 18-karat gold Apple Watch Edition? – November 5, 2014
Why the Apple Watch can afford to cost thousands of dollars – December 12, 2014

56 Comments

      1. Oh definitely like so many of them are. There article is not much ado about nothing, tying smoke mirrors and spin to make their conjecture(s) sound plausible in the realm of reality.

        “Do I really need to lay out the implications of a $20,000 18 karat solid gold Apple Watch?”

        Actually what I’d like is the factual reference to where that $20,000 comes from. Is it the price obtained by an actual source at Apple? Is it an estimated price derived from looking at the components? Is it the price that a bunch of jouranalists came up with during their most recent manure love fest?

        That might just show them their incredible lack of integrity and promote actual honest to goodness researched factually filled reporting, but I doubt it.

        It is however a nice opportunity to say hi as cross paths and to once again thank you for the insights that you provide here. Funny how that works, the feedback of some of the regulars here beats the reporting from many of those who get the headline.

        1. A smartwatch is not a watch at all. It is not a work of mechanical art that will hold its value for generations. It’s a small computer that will lose value as quickly as any other computer does. Anyone paying ridiculous amounts for an Apple Watch is really going to be ticked when Apple Watch 1s comes out.

          1. Jewelery and fine watch markups (and Apple’s going to be in these outlets) run in the range of “triple key” (3 times the cost) to quintuple key, so this bodes to Apple’s highest net profit percentage margin of any product they’ve ever sold by a multiple, even at wholesale.

            I imagine that at “XK $” per copy (where X=5 to 20), it becomes economical to provide an upgrade path for the guts, NTM firmware and OS upgrades for years on the last physical swapout of any given model.

            In terms of gold and electronics, a volume analysis and some other guesstimation comes up at around $6-800 for Apple’s cost, so they have room to play with plenty of options to tackle this problem.

            (Tho’ I do recognize that it is a problem if they really do plan to charge those kind of prices.)

            1. I don’t think apple will jack up the price 3x for “status” pricing. That doesn’t mesh with their philosophy. Their philosophy is build premium products that people love, using high quality components with meticulous detail, and maintain a healthy 30-40% margin. Apple does charge a premium for upgrades (see pricing for 128 gb phone vs 64). A 40% margin would crush the competition and seem like a bargain…I think the edition goes for 8-12k…hell I’d still be impressed!

          2. Thelonious, the first part of your post is absolutely spot on, and is why WS and Apple competitors get it all wrong. The iPhone is not a cell phone, it is a hand held computer that CAN make cellular calls.

            The same will be true of the Apple Watch, but unlike the iPhone, it will have an economic life like the iPad (5 years or more).

            Gold wrist watches aren’t priced based on their cost of manufacture. A gold Rolex doesn’t cost that much more to manufacture than does a stainless steel Rolex. Yet the price difference goes from $6,000 to $20,000.

            I agree with John Gruber, those that buy an Apple Watch Edition will do so because of the status it implies. They will not be concerned about next year’s model advancements (which will be upgradeable software).

            If the Edition were priced at $20,000 would Apple be able to sell any? Yes. A lot. Apple’s products are priced beyond MBA cost of goods models. Apple builds better, then charges a premium based on better, not cost of manufacture. That philosophy destroyed Nokia, Motorola, RIMM (Blackberry), HTC, and many others.

            The millions of $20 wrist watches on the market today have not detracted from the premium ($20,000+ gold Swiss watch) market at all.

            Ignoring the value of “status in ownership” is, at best, myopic, and illustrates a complete lack of understanding of market dynamics.

          3. Thanks for your posts, not only this one but for the other ones you have made regarding the watch.

            I’ll fiddle with the definition that a watch is “a small timepiece worn typically on a strap on one’s wrist.” and challenge what you said a bit by replying that a smart is more than a watch.

            I see how you distinguish is between something mechanical vs. something electronic (as a computer). Putting a computer in the format of a watch to me makes it a watch, as much as putting a computer system in a car still makes it a car.

            That all being said I think your idea is valid with some precision: A smartwatch does not have the same value as those mechanical works of art and precision traditionally known as watches.

            A smartwatch and a mechanical watch both can tell time but the esthetics of a mechanical watch, well it’s a marvel to be sure.

            Either way I think both have value and I do think the Apple Watch will do well.

            Have a good weekend.

            1. “Putting a computer in the format of a watch to me makes it a watch, as much as putting a computer system in a car still makes it a car.”

              Wrong. Putting tires on a car don’t make tires a car, anymore that putting the capability of telling time on a wrist worn computer a watch.

              It isn’t the form factor that defines a device, it is the primary function of that device that defines it.

              Mainframe computer
              Desktop computer
              Laptop computer
              Handset computer
              Tablet computer
              Wearable computer

              Each class of computers are designed to perform computing tasks. Form factor is more a function of advancements in computing technology, than it is in tasks, i.e.., there is far, far more computing power in today’s iMac than there was in a 1970s Cray Super computer, there is far, far more computing power in the first iPhone than there was in the Apollo 13 space module.

            2. Hey greggthurman, love the thought provoking post.

              I said “putting a computer in the format of a watch to me makes it a watch”. The primary function of a watch is to tell time (as a time piece). A computer can tell time as well as a mechanical device (watch of clock). That particular function overlaps. The reverse however is not applicable, apart from telling time, a timepiece such as a watch cannot perform the various functions of a modern day computer.

              Similarly, putting times o a car does not make tires a car, but taking a component from a car the tires and you can get wheel functionality.

              Form follows functionality, this is a common idea but quite often there are multiple parameters of function and multiple parameters of form. Classes of computers all do the same computing task, they interpret zeroes and ones, binary code. You talk about the power of computing that is one functional change, they are also of different sizes depending on the components, and different processing speeds, which is related to power of course. That opens up the option of other parameter of functionality tasks that the computer can do over time, such as transportability, portability, mobility, wearability. At the end of the day, the core principle function remains the same, working with the binary code, though computers can expand to other functions depending on the input and output devices associated with them.

              Can a computer interpret and display time? Yes it can and as thus it can take the format of a watch. Can a watch interpret zeros and ones? Sure it one thinks of it as a mechanical device, mechanical computers were at one time used for calculations, like the analytical engine, the subsequent Babbage device, the automaton and many other mechanical computers. These ingenious mechanical devices were prototypes for the engines of the Industrial Revolution.

              It’s all connected.

              Thanks again for your thought provoking post.

          4. “Anyone paying ridiculous amounts for an Apple Watch is really going to be ticked…”

            Why?

            Everything inside is the same.

            The only difference between each of the collections are the front and back of the case, the straps/buckles pins/butterfly closures as well as, Sapphire Crystal vs Ion-X Glass fronts.

            Obviously, the price of gold will be a settling factor.

          5. How about when the 1S comes out, if you want one you go to Apple and pay $400 to have them remove the guts from your 18K gold watch and replace them with 1S guts? Seems like a no brainer to me.

          6. Ridiculous. Anyone buying an Watch knows full well that in a year the Watch 3GS will be out, and their will be the old model.

            But I don’t think the Watch will become obsolete as quickly as you and other people seem to think. Why? Because the iPhone it is paired with does the heavy lifting. the Watch displays information, records some data from its own sensors, but mostly is a relay device. That won’t need to be updated as frequently as an iPhone or even an iPad.

            Plus, Apple has great trade-in programs, which I’m sure will be continued for Watches, in particular those having precious metals like gold for the case.

          7. Not really. I’ll be thrilled. I’m sure the resale market for original 🍎Watches will be strong enough to make upgrading to the second model a small additional fee. And whatever hardware upgrade the march of technological miniaturization will make possible, will be worth the additional fee. I’m thrilled to still be alive long enough be a part of this next chapter in personal computing. And any hardware upgrades will be equally thrilling and worth the additional price of admission! 💥🚀😎

      2. Why do vehicles get hit by trains at railroad crossings? It happens year after year. Signals and barriers didn’t prevent those crashes. The drivers were impatient, overconfident, made faulty assumptions, discounted blatant warnings, —all sorts of human failings. They didn’t pay proper attention to the world around them.

        I think typical tech analyst is like that. Limited imagination, self-absorbed, careless. Tries to visualise what Apple has in mind, turns lame idea into article, collects paycheck, heads home. Gets hit by Apple Express.

  1. I have never gotten the sense that Apple has ever tried to sell status. They sell great products that people really want to have; they may start out as status symbols for the initial adopters, but they soon become ubiquitous because they are just great products.

    1. Clearly, Apple knows the difference between fashion and style. And design carries style with it, but has no purpose as the end goal. So far they have never set out with status as the goal. I hope that’s not changing. But the top level hires seem to be about status much more that insanely great products. Time will tell if there is a shark fin on that watch.

    2. Jziii…very much agree. Selling status is selling vapor–some will embrace it, but it doesn’t endure. On the other hand selling quality, or quality products equates to excellence and excellence distinguishes. Being distinguished puts things in a different strata–that equals status. The previous Beats product was an example of the vapor of status. Such is not in Apple’s DNA…or it least it hasn’t been up to now.

  2. After wearing the apple watch for a couple of months, TC said, “He couldn’t imagine living without his watch”.

    Now that doesn’t sound like a fashion quality to me. Sounds more like a, “we make great products that change the way you live your life” kind of product. A smart watch it is! Maybe even a “fashionable smart watch”.

    1. Gold does not make the Apple Watch more durable or operate better. The only purpose in making a gold Apple Watch is to make a fashion statement.

      Fashion statements carry HUGE margins unrelated to functionality or costs of manufacture: Louis Vuitton, Rolex, Tag here, Prada, Burberry, et al.

      Look who Apple has been hiring since Angela Ahrendts (formerly CEO of Burberry). They are all very high end fashion people.

      Fashion without quality becomes a fad. Fashion with quality becomes an aspirational product/brand.

      Since Steve Jobs return Apple products have become fashion statements.

      Bondi Blue iMac
      Goose neck iMac
      Computer in the screen iMacs
      iPhones
      iPads

      They are of higher quality than competing form factors that are fashionable. They are aspirational and priced accordingly.

  3. Other interesting articles indicate that the straps will be expensive. I am planning to buy the sports version which will come with the neoprene strap. But I was also contemplating buying a metal strap. I will probably buy that later on if the price is steep.

  4. Where and how the hell did he come up with the $1,000 price tag for the stainless steel Watch and $20,000 for the gold watch? Plucking figures out of the air after a few too many in the bar, me’s thinks.

  5. status? F that. Apple sells things that work, for the rest of us. Why would “status” be a goal? Is apples goal now to just make as much money as possible? I’m guessing then they aren’t making computers anymore….

    1. With the three models they’re embracing all the reasons people may have for buying.

      I can appreciate this as a likely viable business approach even if I have little use for status symbols and the compensation syndrome I observe in those driven to watches the size of “wrist tanks” like some of the Rolexes…

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