“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
Ewan Spence isn’t providing news, instead he’s spewing intellectual feces.
I read another article by Ewan Spence at Forbes yesterday that was completely clueless. He has no idea what he’s talking about when it comes to Apple and its products.
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.
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.
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.)
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!
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.
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.
“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.
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.
“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.
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.
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.
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! 💥🚀😎
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.
Actually, he’s dead on.
so glad I don’t have a learning writing such dreck
Indeed
I don’t think you have any worry about learning to write.
“earn a living writing such dreck”
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.
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.
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.
so glad I don’t have to earn a living writing such dreck
That’s better. Siri can make life very interesting.
Amen, brother
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”.
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.
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.
iPod v MP3 player all over again.
Not exactly. When the iPod shipped mp3 players sucked.
There are some very nice watches on the market and a lot of people don’t even wear one any longer.
We will have to wait for the Prices.
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.
You didn’t read the article, did you?
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….
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…
If it isn’t status, it’s an attempt at fashion. The iPhone was truly a breakout product that appealed to many people across all walks of life. Anyone sick of using their crappy phones.
People, even non-technical people sensed that their phones could be better. When Steve demonstrated the iPhone, there was a collective, “Yeah.. that’s it. That’s what we’ve been wanting.”
With the watch, the appeal is far more narrow. Even most of us who live and breath Apple are wondering what we would do with it.
Apple is hoping to sell a luxury item, just like Spense says. There’s nothing wrong with that. He’s also right about Apple not selling a Smartwatch, per say. Most people who want a Smartwatch, probably want the Apple Smartwatch, and that’s emotional, or as Spense says, aspirational.
I have doubts about the Apple Watch, but I doubt the Smartwatch category in general. I think the whole idea of “wearables” as it has so far been presented, is silly. There’s no big pent up demand for wearable tech from Apple or anyone else.
Apple knows this. So Apple must be selling something other than technology here.
I recently attended a meeting of several boards of trustees. The main topic of conversation at social gatherings was the Apple Watch. I don’t think people realize just how big this is going to be, people are really excited.
The Apple Watch is the tock of the town.
So why do so many people seem ticked off about it? Oh well, time will tell…
Since it’s likely to be a bit pricey at first, I’ll probably be getting one secondhand.
How about a Titanium case, very strong, light and I believe can be polished. Tag Heuer has be making their cases out of Titanium for years. Of course some may want a heavy stainless steel case that can be used as a backhanded weapon.
I’ve never been a fan of Forbes and its pool of omniscient contributors and so-called writers. It’s just a glossier version of Business Insider.
Ever notice that Apple never referred to
• the iPhone as a ‘smartphone’
• the Mac as a ‘personal computer’
and now,
• the Watch as a ‘smart watch’
Ever wonder why?
It’s never been just about the Benjamin’s. Even when Steve was at Apple, he wasn’t concerned about having the largest share of the market. He was concerned that the market was only producing C.R.A.P. and he wanted something better for himself. He was a pretentious prick with incredible taste. He knew that most computers were pigs. He figured out that adding lipstick and making them sexy(OS X) helped. He was always concerned about details. SJ created the foundation and the DNA that is still bearing fruit today. With the iPod I think everything started to finally pay off for the bottom line in a REALLY BIG way. Apple has learned from their mistakes(example: days before and app store but after the iPhone) along the way. You can’t make and Apple watch without the iPhone. I don’t mean just because they must be paired. Without the base of loyal fans who already pay high margins for Apple’s current stable of products The Apple watch would never have been possible. Apple fans will buy this device because: 1. They are highly functional and easy to operate. 2. They look freakin awesome. 3. Because They can…for the most part. I can’t buy a high end mac pro. I can’t even buy a high end iMac, but I can buy iPhones (on contract) , a couple Air’s…on sale $759 for Early 2014 and even iPads. I love Apple products. While I can’t speculate on the price of anything other than the “Sport” Small; I can imagine that the price could go quite high for the other 2 models. I know I want an Apple watch. I know my wife and my daughter with Type 1 diabetes will REALLY want ones also. That’s a lot, no matter how you look at it. My expectation is that there will be much revenue generated by accessories and that Apple will charge what the market will bear. The Watch Edition will appeal to about 2%(who can afford ANY PRICE) of the 7% of iPhone users who already have said that they intend to purchase an Apple watch of any kind. I include myself in the 7% who will buy at least 1 Apple watch. I expect the share of Stainless Steel Apple watches will sell for 500-750$ and getting about 25% share or whatever the highest memory iPad will cost without 4G radio.
The highest margin though may be the low end of the spectrum where about 50-60% of sales will be. The ONLY difference in these watches alone are the SHELL and Front Glass. The sensors and chips are all the same.
Apple still has a lot to uncover on the watch but I am excited. We will soon find out if batteries are replacable?? Is the shell swappable? What are the Warranty Details….are they the same for each model?? can a high end band slide into the entry level watch? Will Beats be making special watch edition blue tooth head phones. Will Jon Ive wear the Sport model or the edition model? And most importantly …Who will replace Jon Stewart on the Daily Show?
Right on the mark.
“…a pretentious prick…”
Not on you life. Unless you are describing yourself!
I meant md8mac’s mother eats pretentious prick! Steve was not unaware of his harsh demeanor with someone who he felt intellectually below him. If you are so lame as to not understand the statement you are a sore on the devil’s prick. How many nice guys fire someone on an elevator ride when they don’t even know the person?? That said … he was a genius. I still love SJ in spite of some of his personal traits.
“How many nice guys fire someone on an elevator ride when they don’t even know the person?”
Interesting.
The story has been debunked!
Apparently, the guy was never identified.
No one else was witnesstt to the even.
• Similar ‘stories” proven false, have
…by written before for other ‘bosses.
In other words, like most bogging, they are bullshit.
Apple Watch- dorky iToy.
Wonder how much money and how many man hours have been wasted on this thing?
Apple does marketing extremely well. They know how to position their products. I’m keen to see how the Apple watch does when it’s launched. I suspect it’ll do fantastically well in China.
This Apple Watch is going to replace my Casio Data Bank. Finally a worthy replacement.
My $20 Casio just stopped working after 2 years of loyal service… What to do?
The Watch will sell like Klondike bars in hell. I’ll sell a couple shares of AAPL and get a couple for me and wifey-poo. I’m trying to see a downside.
Don’t sell your AAPL, use your dividend for that.