I have to agree with the idea that Apple overshot their expectations of how customers would react to this product. I think Apple clearly thought this was a fashion and prestige piece and something on par of usurping high end Swiss watch produced (they even boasted about how the Swiss watchmakers should be worried in their pre-release rhetoric about the Apple Watch). The reality is Apple is more a Timex/Casio and not a Rolex competitor, and most consumers are intelligent enough to know the difference, which is why the only models that are selling well comparatively are then $350 models.
There is a reason why companies like Timex and Casio don't make a $10,000 gold watch or offer $1000 watch bands for their products because they understand their place in the watch kingdom and know nobody is going to mistake a digital watch as a prestige piece. The ultimate destiny of EVERY first generation Apple Watch is to end up in a junk drawer as your first Timex Ironman, something that you hold on to for nostalgia, but will never put on your wrist in a functioning state again.
I am not saying there is no place for the Apple Watch, but I think we don't need to see Apple Watches cost more than $500, and that is only because of the "TECHNOLOGY" that is in it, not because of the material or band you wrap around a digital screen. Apple thinks too highly of themselves and they failed to offer a product that replaces a high-end Swiss watch, not on design and form and certainly not on prestige.
The only people that don't agree are hipsters that think putting a $10,000 gold plated Timex on their wrist sets them further apart from the average consumer, which it does, but purely on lack of having common sense. Putting a $350 micro-iPad into $500 worth of gold does not make it worth $10,000, ever.
You don't get it. The profit margins on the special editions are so high, it doesn't really matter how few they sell - it's all pure profit. The extra advertising and a market exposure with 'high-end' 'aspirational' branding tie-in is just icing on the cake.