AirPods and Apple Watch Called 'Underpriced' to Bring New Users Into Apple Ecosystem

MacRumors

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Apple is underpricing AirPods and the Apple Watch in an effort to bring new users into its ecosystem, according to Neil Cybart of Above Avalon. The analyst said this pricing strategy was "unimaginable" ten years ago, when Apple was often accused of pricing products artificially high, aka "Apple Tax."


AirPods cost $159 in the United States, which Cybart said is "surprisingly low" compared to competing truly wireless headphones:
It is very difficult to find a pair of wireless headphones priced lower than AirPods. In the run-up to Apple unveiling AirPods this past September, the wireless headphone market consisted of the following players:

- Kanoa: $300
- Bragi Dash: $299
- Erato Apollo 7: $289
- Skybuds: $279
- Earin: $249
- Motorola VerveOnes+: $249
- Samsung Gear IconX: $199
- Bragi Headphone: $149
Cybart believes a strong case could have been made for Apple to price its AirPods at $249, or even $299, but by selling them for $159, he thinks Apple has "removed all available oxygen from the wireless headphone space" and forced competitors to cut pricing in an attempt to better compete.

Earin's wireless headphones now start at $199, for example, while Motorola's VerveOnes+ are on sale for $189.99. Even at those discounted prices, however, AirPods are still cheaper at $159.

AirPods are estimated to ship in six weeks on Apple's online store, and it has been that way since the day after they launched in December.

Cybart said a similar pricing dynamic is found with the Apple Watch, which now starts at $269 for Series 1 models:
At $269, Apple Watch Series 1 is one of lowest-priced smartwatches worth buying in the marketplace. Attractive pricing was one key factor driving record Apple Watch sales this past holiday quarter. In fact, even the Apple Watch Series 2, at $349, is one of the lowest-priced smartwatches in its class:

- [Garmin] Fenix 5: $599
- Garmin Forerunner 630: $399
- Michael Kors Access: $350
- Samsung Gear S3: $349
- Fossil Q Founder: $275
Cybart believes the pricing of the Apple Watch demonstrates how Apple is looking to capture not only the premium segment of the wearables market, but rather the entire market. While an entry-level Apple Watch costs $269, for example, a ceramic Apple Watch Edition costs upwards of $1,249.

His research note theorizes that Apple could be more effective now at mass producing products at a lower cost, while offering price points that appeal to a wider variety of users. Higher-priced Apple Watch SKUs likely offset the lower margins of Apple Watch Series 1 models as well, he said.

He even thinks that an Apple Watch for $199 is "inevitable," although there might be less wiggle room for products such as iPads.

Overall, Cybart thinks Apple is in essence "redefining luxury" by offering lower prices while, at the same time, becoming more of a luxury brand. He expects it to be difficult for other consumer tech companies to compete with that strategy.

Of course, many Apple products are still unquestionably expensive. The latest 15-inch MacBook Pro with Touch Bar starts at $2,399, while an iPhone can cost upwards of $969. The 12.9-inch iPad Pro is priced from $799, and a handful of Apple Watch models run over $1,000. All prices are based on U.S. dollars.

Full Article: The Curious State of Apple Product Pricing on Above Avalon

Article Link: AirPods and Apple Watch Called 'Underpriced' to Bring New Users Into Apple Ecosystem
 

vertical smile

macrumors 601
Sep 23, 2014
4,291
5,391
by selling them for $159, he thinks Apple has "removed all available oxygen from the wireless headphone space" and forced competitors to cut pricing in an attempt to better compete.
I was thinking of getting a pair as the EarPods fit me well. But, you cannot adjust the volume during a phone call. If there was any listening situation that require adjustments to the volume, a phone conversation would be it.

Wireless head phones for a fraction of the price of the AirPods can adjust the volume during a phone call.
 

tongxinshe

macrumors 6502a
Feb 24, 2008
812
370
I can easily find bluetooth earphones for $20.
$300 and north for an extremely heavy weight electric watch, which expires in 2-3 years, and you call it underpriced? What year is it now? Maybe we overslept and the gold price is already $30000 an ounce nowadays?
 

OldSchoolMacGuy

Suspended
Jul 10, 2008
4,197
8,907
Both require an iPhone for use. If you get someone hooked on the Apple Watch or AirPods, you don't have to worry about them leaving for Android as it's simply not an option. Small price to pay to keep people using their phones where they make far more money.
 

dotdotdot

macrumors 68020
Jan 23, 2005
2,381
33
Underpriced? How does that make sense.

The Watch Series 1 argument could be made, but thats because it's last years tech.

But AirPods? They look decent and their functionality is awesome, but they have 0 isolation and sub-par sound quality - the exact same sound quality you'd get if you used the FREE wired headphones included with every iPhone.
 

Lihp8270

macrumors regular
Dec 31, 2016
121
87
I was thinking of getting a pair as the EarPods fit me well. But, you cannot adjust the volume during a phone call. If there was any listening situation that require adjustments to the volume, a phone conversation would be it.

Wireless head phones for a fraction of the price of the AirPods can adjust the volume during a phone call.
What totally wireless in ear headphones are a fraction of the price?
 

Phone Junky

macrumors 65816
Oct 29, 2011
1,416
2,193
Sunshine State
Both require an iPhone for use. If you get someone hooked on the Apple Watch or AirPods, you don't have to worry about them leaving for Android as it's simply not an option. Small price to pay to keep people using their phones where they make far more money.
You need a damn iPhone to use the watch and AirPods ....cheap my ass!! most expansive into to any ecosystem
AirPods work with anything that regular bluetooth headphones work with.
 

shareef777

Suspended
Jul 26, 2005
2,445
3,218
Chicago, IL
This literally makes zero sense. Anyone buying an Apple Watch or AirPods is already in the ecosystem. An Apple Watch doesn't work without an Apple Phone (which is what the iPhone should be renamed to).
This! The iPhone is thee gateway system. You can tell because everything is now designed and built around the iPhone and its OS. MacOS is becoming more like iOS, the iPad which can do so much more then the iPhone is still crippled with iOS, and the AirPod/watch are really only made for the iPhone. And yet there are rumors that the next iPhone price is going up (the higher selling plus model already did).