Apple mines big profits from Apple Watch bands

“Nearly 20 percent of Apple Watch buyers are not only shelling out hundreds of dollars for the timepiece but are springing for a spare band too, giving the tech giant a profitable second dip into customers’ wallets, according to data provided exclusively to Reuters,” Julia Love reports for Reuters. “The data from Slice Intelligence, a research firm that mines e-mail receipts, offers a rare window into the money-making potential of Apple’s first brand-new product under CEO Tim Cook.”

“The ever-secretive company has yet to release how many units of the watch it has sold, let alone how profitable it is. Slice estimates the company has sold 2.79 million as of mid-June,” Love reports. “Although the entry-level sports band retails for $49, it costs only about $2.05 to make, according to an analysis of the 38-millimeter size by IHS, a technology research firm. The estimates do not include expenses such as packaging and shipping and may not capture the full cost of the material Apple uses to make the band, said analyst Kevin Keller of IHS.”

MacDailyNews Take: “The estimates do not include expenses such as packaging and shipping and may not capture the full cost of the material Apple uses to make the band.” So, 38mm Sport Bands do not cost Apple “only about $2.05” to make.

“Data from Slice, which analyzed only bands made and sold by Apple, showed about 17 percent of shoppers purchased more than one band,” Love reports. “The black sport band is the most popular choice for both the band that comes with device and extras ordered by consumers. Former Apple executive Jean-Louis Gassée, for example, went with the sport model for his starter Apple Watch, reluctant to invest too much in a first-generation product. But he did not skimp on bands, purchasing a black quilted leather loop and a white sport model. He reaches for the leather for business meetings and swaps it out for the rubber model when he heads to the gym.”

MacDailyNews Take: Gassée got that white Sport Band with his Apple Watch Sport. He did not buy it separately.

Apple Watch band sales - Slice Intelligence

 
“Apple has opened the door, creating a platform for third-party developers to design bands of their own. Apple will not share in the revenue from sales of those bands, according to a person with knowledge of the matter,” Love reports. “If bands designed by outsiders take off, that may make a dent in sales of Apple’s own accessories. But having a stylish array of bands to enhance the appeal of the watch is most important, experts say – the extra revenue for Apple is just a fringe benefit.”

Read more in the full article here.

MacDailyNews Take: The sales Slice is seeing is to early adopters (pre-orders mainly).

So, here’s what happened, from personal experience:

The vast majority of early adopters bought Apple Watch Sport units. They wanted one with a Black Sport Band which Apple oh-so-conveniently did not offer among pre-order options. So, like we did, and Jean-Louis Gassée did, 17% ordered an Apple Watch Sport with whatever band they thought they could live with as a backup and then ordered the Black Sport Band (for another $49) to use on the Watch. We went for the first two weeks with White Bands before our Black Sport Bands arrived. Two long weeks; during which we explained to everyone that these bands weren’t our choice and our black bands were coming. The Watches are much more to our liking in silver (7000 series aluminum) and black. Of course, Apple knew this combination would be most popular.

Apple Watch Sport with original White Sport Band pre-order config (left) and with new ($49) Black Sport Band (right)
Apple Watch Sport with original White Sport Band pre-order config (left) and with new ($49) Black Sport Band (right). Wonder if two-tone Apple Watch bands (center) will become a thing?

As we wrote back on April 14th, ten days before we got our Apple Watches:

Apple forced the Space Gray Apple Watch Sport with Black Sport Band to be the most popular choice. Just like they forced us to buy our Apple Watch Sport units with White Bands (that we plan to leave in the boxes) and to spend an extra $49 per Watch for the Black Sport Band that the Silver AWS obviously should have been offered with in their canned preorder configs (if Apple were interested in offering a model that would be several times more popular than any other Apple Watch Sport combo). Plus the fact that the “blue,” “green,” and “pink” colors that they did offer with AWS are, in varying degrees, unwearable, ugly, and putrid (not to mention generally too-feminine for a 42mm AWS on a male wrist).

Apple Watch Sport preorder configs in Snow White, Baby Blue, Oh-So-Tender Green,  Puke Salmon, and Black (but not for the Silver AWS)
Apple Watch Sport preorder configs in Snow White, Baby Powder Blue, Oh-So-Tender Green, Puke Salmon, and Black (but not for the Silver AWS)

 
It’s almost as if Apple’s assemblers produced too many Space Gray AWS and/or not enough Silver ones, so they tried to manipulate the preorders by leaving the Black Sport Band out of the choices for the Silver AWS. Or they were trying to grab an extra $49 for Black bands (with us, they succeeded multiple times; regardless, it did guarantee we’d get our Watches on Day One, so it was worth the extra $49 per). Or they were trying to push AWS buyers (many of whom will be transitioning from things like Nike+ FuelBands and are therefore looking for the lightest weight possible) to AW in order to get the silver (Stainless Steel) with Black Sport Band preorder config that they did, for some reason, deign to offer, proving that a Silver Watch with a Black band is not aesthetically offensive to Jony Ive (who may, in fact, given the evidence above, be colorblind). (We’re not decorating nurseries here, Jony. These are watch bands.)

So, how many people chose the Space Gray case just because it was the only AWS preorder config that offered a black band?

SEE ALSO:

Did Apple underestimate the most popular Apple Watch Sport color? – April 14, 2015

22 Comments

  1. I ordered space grey because I wanted the black watch- I think it’s stunning. That said, it does seem that Apple is taking advantage of people by not offering the black band with the aluminum watch. But this is really just a “first adopter tax”. I’m sure you’ll be able to buy $5 bands for the Watch out of China in no time…

    1. Apple is selling stripped down Macbooks (one-port), with processor speeds seen in Macbooks 4-years ago, for $1000 plus, when it costs a little over a hundred bucks to make! And the extra bonus feature… it conveniently DOES NOT connect to ANY Apple monitor!

      Lovely.

      The entire Apple Watch costs just over 40-bucks to manufacture (with the cheap “retina” plastic bands costing a mere two bucks), yet Apple charges anywhere from $350 to several thousand for the privilege of delivering 12-inches of a%* abuse, while advertising the bands are made out magically flexible Apple plastic.

      What next, a Macbook Pro for $3000 that’s the same as the Mackbook but with an extra USB port and wearing a “Pro” badge?

      When is enough “enough”?

  2. $2 or not….Apple’s prices could be lower these days, they aren’t hurting for money anymore! They could do the bands at $9.99 or $19.99. Mice and keyboards could be alot cheaper at $29 or so. Most of their computers with built in graphics could be cheaper as well. I think they could almost all be brought down about $300 like the iMacs starting at $799 or so. The new macbook is the smallest and least ports on a laptop and barely anything to it and you would think it could be $300 machine, but instead they are what around $1200 or so. With little bit of cheaper prices I think they could grow more marketshare and gain more switchers, etc.

      1. One thing not premium is the coating on the charging cord for my 2010 MacBook Air. Frayed merely by resting on the wooden lounge chair armrest where it lied after picking up charging laptop to use. I showed Apple store, I forget the wording they used but said I can get a new one for 80 bucks but I declined telling them not buying while it still has cheap ass plastic coating on charging cord. Apple considers glancing as abuse I guess.

  3. I bought the black stainless steel so it came with the black link band. The link band is exquisitely made and so simple to remove a link to change its size. I did buy the black sport band for working around the house and yard. I also bought the classic leather band, just so I’d have different bands for different occasions. They are all very well made. There is a Chinese band available but they want $50 at Castify.

    1. LINK PLEASE to the $50 Black Link Band? I ordered the Kickstarter Campaign – just ended – LUNATIK Black anodized aluminum CASE with matching Black anodized aluminum LINK BAND for $150 September delivery. Main reason I ordered the case was so I could have a black link band.

      So if you know where I can get an WATCH Black anodized aluminum LINK band for $50 I would really appreciate you providing us a link to where we can order one here now PLEASE?😱💥😨😩😜

  4. I ordered, and received on day one, the Space Gray with black band because I wanted the Space Gray case (and the black band). It’s perfect, I love it. I have a Milanese Loop ordered. Wish it were available in black too.

    1. My wife got a 38mm silver Sport with white band. We have a Soft Pink Modern Buckle ordered for it which we would have ordered instead of the white band had it been available with the Sport. But we will be glad to have both, white for exercise and general use, soft pink for more dressy occasions.

  5. The silver sport watch looks smaller. Black face on silver body is slimming, compared to black face on black body. (Like wearing vertical stripes.) If you don’t believe me, go look at Apple’s marketing photos side by side. But I definitely prefer the black band and have always planned to change my white to black. So, yes, I regret Apple’s restrictive combinations. Why not let us choose our watch and choose our band??

  6. This is one of the reasons why I believe ASP is $800 on this product, which means 7 million Apple Watch sales a quarter equals the revenue of about 14 million iPad sales a quarter. It looks like Apple has created another successful category.

  7. I wonder if Apple Watch 2 will be able to be ordered sans band?

    (If you already have a nice stainless band on your AW 1 and only want the new stainless watch module for example.)

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