Apple Watch price drop?

[Yixian]

Considering competitors like the Moto 360 have dropped their prices considerably and studies suggest AW sales have fallen significantly since launch, do you think Apple could drop the price of the AW in time for the holiday season?

It would seem to me that the sweet spot price range for products like this to sell well and consistently is perhaps closer to $200-250.

Even to myself as a major Apple fan and early adopter, the asking price right now just seems pretty hard to justify, and I'm earning quite a bit above average.

 

[iBighouse]

I think they will drop the prices on the current models ONLY when next year's models are released.

 

[zaquinho17]

the asking price for the SS models are ridiculous. The only justifiable purchase is the sport versions.
reasons being: I've owned 3 Micahel Kors watches ($250-350) in the past 2 years and they all had malfunctions or parts came off, scratches easily and in one case the watch face became cloudy. NO HELP FROM MK WITH ANY ISSUE, HORRIBLE CUSTOMER SERVICE.

My point, i could spend the same amount of money on a watch that only tells me the time, or the AW Sport that does all of the "good stuff" as well as the time.

but, the SS does not fit in this category, let alone the gold versions..



and yes, this is how I 'sold the watch' to myself

 

[Yixian]

I think they will drop the prices on the current models ONLY when next year's models are released.

Probably you're right, I expect they think that holiday spending will increase sales without a price drop. But presumably there will be long periods of pretty rock bottom sales if between now and xmas, and xmas and next September if that's the case.

Can't help but feel they should make the thing more affordable to maintain some of the enthusiasm for the product before it tapers out and loses it's cool factor.

Sometimes you just have to bite the bullet and accept that you've mispriced, I can't help but think that this is the case with the AW. It goes beyond that normal Apple tax into "I just can't justify spending x hundreds of dollars on something that does y".

 

[DynaFXD]

Considering competitors like the Moto 360 have dropped their prices considerably and studies suggest AW sales have fallen significantly since launch, do you think Apple could drop the price of the AW in time for the holiday season?

We don't anything about sales other than speculation and various indirect studies. Only Apple knows how sales are going compared to expectations. And for that, Tim says things are going better than expected. So there's that

Apple never (it seems) engages in a race to the bottom. If others have to drop their price to get movement on their product because AW is grabbing all the sales, then don't expect Apple to follow suit to maintain teh pressure. Apple is more than happy to let others duke it out in the low margin market sector while they sit in the cat bird "premium item" seat grabbing the profits.

I doubt you'll any price reductions on the current model. The next model may introduce an economy model, but I will bet you that it will be a lower spec'd item that even a version 1.0 model will surpass. But like everyone else, I'm pulling that out of my butt

 

[DynamicSausage]

It's not really very 'Apple' like to drop prices, this soon in to a product life cycle, especially given the watch's success. I agree that it is more likely that the prices may drop when a new generation comes around or they may take the iPod route and just replace this one altogether.

Let's not forget, the prices are dropping because Apple have come along and dominated a fairly dull market, who are they trying to compete with? Themselves?

 

[sjinsjca]

More likely, models below the current Sport will be introduced as production constraints ease. Consider the iPhone 5C two years ago: resin body (think Casio watches), many colors, perhaps different styling, a notch lower price, maybe an acrylic crystal (don't laugh, some very dear Omegas use those... extremely hard to break--way more impact-resistant than sapphire or mineral glass--and scratches can be buffed out).

That would be a sensible strategy, but only when production smooths out. Otherwise, why waste capacity on lower-end models while they can sell every Watch they can make?

Given the pace of things, this might be something to look forward to for this coming Holiday season... or next.

Such a "Watch C" wouldn't be vastly cheaper, since just the case and maybe the crystal and band would have savings. But then, the 5C wasn't vastly cheaper either, and it sold well and helped higher-end models enjoy component economies of scale.

But consider your premise. "Studies" have shown Watch sales have dropped? There's precisely one "study" with any data, and it merely showed that online sales dropped coincident with availability in the Apple Stores. The pundit-o-sphere took that one claim and metastasized it all over the web. Meanwhile Tim Cook just stated that June was the best month for Watch sales... and I rather doubt he'd risk charges of material falsehood (a serious securities-fraud charge) by stating that if it were untrue. And then there's the price-drops of the Moto360 etc that you mention. Those price drops were pretty obviously a consequence of the Watch sucking all the air out of the smartwatch room.

The market pressures on Apple to cut prices may be less than you think. If and when demand softens or inventory starts to pile up, that's the only economically sensible time to cut prices on existing models. If and when component production capability begins to significantly exceed sales of current models, that's the time to introduce something below the current Watch.

And there might be another twist Apple could consider. Instead of cutting prices on the Watch outright, they could offer an attractive bundle with purchase of a new iPhone. "Choose a Watch when you upgrade to the fabulous new iPhone 6S+. Save $50. It's about time."

 

[sjinsjca]

It's not really very 'Apple' like to drop prices, this soon in to a product life cycle

Despite what I just wrote in my previous post, there is one big example of Apple doing exactly that: with the original iPhone. It was a pretty spectacular launch, yet as the early adopter market saturated and production capacities caught up, Apple felt it wise to cut the price of the iPhone by a rather considerable amount.

So, let's never say never. But I think there are other things Apple might try first, rather than just cut prices.

Oh, there's one other strategy that seems very possible: Introduce a new model above the current ones, and cut the prices of the current ones accordingly. That's another very Apple-y approach.

 

[Yixian]

It's not really very 'Apple' like to drop prices, this soon in to a product life cycle, especially given the watch's success. I agree that it is more likely that the prices may drop when a new generation comes around or they may take the iPod route and just replace this one altogether.

Let's not forget, the prices are dropping because Apple have come along and dominated a fairly dull market, who are they trying to compete with? Themselves?

Agree but what's the other new product that has had significant drops to maintain sales?

Apple TV

They could also cut the price of bands or bundle other bands than the Sport band with the entry price models.

 

[Armen]

Considering competitors like the Moto 360 have dropped their prices considerably and studies suggest AW sales have fallen significantly since launch, do you think Apple could drop the price of the AW in time for the holiday season?

It would seem to me that the sweet spot price range for products like this to sell well and consistently is perhaps closer to $200-250.

Even to myself as a major Apple fan and early adopter, the asking price right now just seems pretty hard to justify, and I'm earning quite a bit above average.

Nope. Apple sold more watches in the last 3 months than all of android wear did in a year. They don't need to drop the price.

 

[Yixian]

Nope. Apple sold more watches in the last 3 months than all of android wear did in a year. They don't need to drop the price.

Why would they use the sales figures of such an immature market to limit what they know they could achieve given their 1) product and 2) brand position?

Also, if the reports are correct that the sales have significantly dropped, that's another separate issue showing that regardless of initial sales, something about the product is not leading to consistent sales. Why would a business not attempt to correct that but rather accept far lower sales for a long period of time simply because they had a good launch based on their hardcore fans?

 

[terminator-jq]

I owned an Apple Watch for 3 days and loved every second of it but the functionality of it did not justify the price. I just couldn't justify loosing $400 for a device thats main feature was saving me the few seconds it takes to take my phone out of my pocket. The Watch OS 2 adds some better functionality but it is still not enough for me. A price drop would make me and I'm sure a lot of other people, buy an Apple watch in a heartbeat.

In business school, they teach you that if you market something as a premium product, you can charge a premium price. However, in this case, Apple has gone a little too far. I have no problem paying the "Apple tax" because I know that Apple makes quality products but in the case of the Apple Watch, it is quite frankly a poor value at its current price and I'm not the first nor will I be the last person to say that.

So if you ask me, Apple should be charging:

- $199 for the 38mm Sport model

- $249 for the 42mm Sport model

- $19.99 for replacement Sport bands

I doubt it would ever happen but its certainly more reasonable, especially for their entry level model. Keep in mind, it only cost Apple around $83 to manufacture the 38mm Sport model.

 

[JohnApples]

I personally think that each Apple Watch model (excluding Editions of course) should have been $100 cheaper than their current prices. Don't get me wrong, I love my Watch, but I wouldn't pay $400 for it again. I've had a handful of people ask me if I would recommend it, and I keep saying "Yes, but I'd wait for a price drop."

It's not na ungodly amount of money, but it's still a steep price especially for the non-tech-savvy.

 

[Armen]

Why would they use the sales figures of such an immature market to limit what they know they could achieve given their 1) product and 2) brand position?

Also, if the reports are correct that the sales have significantly dropped, that's another separate issue showing that regardless of initial sales, something about the product is not leading to consistent sales. Why would a business not attempt to correct that but rather accept far lower sales for a long period of time simply because they had a good launch based on their hardcore fans?

In my opinion Apple set the price correctly for the Apple watch based on what other devices are selling for in a similar category:

The Fitbit Surge is $250.00: It has a HR monitor, activity tracking and can display notifications.
The Pebble Time is $250.00: It uses its accelerometer to track steps, displays notifications.

The Apple watch is $350.00 and has WAY more features than the 2 above combined.

 

[zaquinho17]

Probably you're right, I expect they think that holiday spending will increase sales without a price drop. But presumably there will be long periods of pretty rock bottom sales if between now and xmas, and xmas and next September if that's the case.

Can't help but feel they should make the thing more affordable to maintain some of the enthusiasm for the product before it tapers out and loses it's cool factor.

Sometimes you just have to bite the bullet and accept that you've mispriced, I can't help but think that this is the case with the AW. It goes beyond that normal Apple tax into "I just can't justify spending x hundreds of dollars on something that does y".

I owned an Apple Watch for 3 days and loved every second of it but the functionality of it did not justify the price. I just couldn't justify loosing $400 for a device thats main feature was saving me the few seconds it takes to take my phone out of my pocket. The Watch OS 2 adds some better functionality but it is still not enough for me. A price drop would make me and I'm sure a lot of other people, buy an Apple watch in a heartbeat.

In business school, they teach you that if you market something as a premium product, you can charge a premium price. However, in this case, Apple has gone a little too far. I have no problem paying the "Apple tax" because I know that Apple makes quality products but in the case of the Apple Watch, it is quite frankly a poor value at its current price and I'm not the first nor will I be the last person to say that.

So if you ask me, Apple should be charging:

- $199 for the 38mm Sport model

- $249 for the 42mm Sport model

- $19.99 for replacement Sport bands

I doubt it would ever happen but its certainly more reasonable, especially for their entry level model. Keep in mind, it only cost Apple around $83 to manufacture the 38mm Sport model.

Business school should have also made you take into perspective the long term. Samsung for example, keep putting out new devices all year round, where as apple tweak their software all year round making their users have constant changes without hardware expenses. Others rely more on the hardware change than anything else. sure they have software updates etc, but nothing that can identify with ANY iOS ever at a keynote.

Sadly this represents "apple tax" at its full capacity. But i believe that if you are wanting a product that you can guarantee the manufacture is constantly altering the software behind, and always innovating your products to suit your lifestyle and sync to other commonly used devices, then you have to pay that tax.

Like stated before, price cuts are not what apple do. They don't need to, they never will need to (not saying they won't), but to them, what is a few people arguing about a price that millions are still willing to pay?

 

[sean000]

Considering competitors like the Moto 360 have dropped their prices considerably and studies suggest AW sales have fallen significantly since launch, do you think Apple could drop the price of the AW in time for the holiday season?

It would seem to me that the sweet spot price range for products like this to sell well and consistently is perhaps closer to $200-250.

Even to myself as a major Apple fan and early adopter, the asking price right now just seems pretty hard to justify, and I'm earning quite a bit above average.

Competitors like Creative sold devices that held more songs than the iPod for much lower prices, but Apple didn't care. People still bought the iPod in droves (except me...I bought the Creative Zen). The iPod was thinner, lighter, better looking, and had a more elegant interface... kind of like the Apple Watch compared to the Android options

I do think the Moto 360 is kind of cool, but it's a bigger and thicker watch than I want to wear. And while I think the round face is a neat idea for a digital watch, I think i prefer the Apple Watch display shape for most views. I definitely prefer the Apple watch form factor, features and haptics.

Unfortunately Apple isn't big on price drops or sales. They seem to maintain the same price points, but offer increased specs for each new version. I could see some kind of holiday offer like a free sport strap when you purchase an AW with a high end strap... or a discount on high end straps with the purchase of an AW Sport. Some kind of BOGO free offer for straps (or at least buy one/get one half price).

I think the only way to really answer whether or not the price is worth it to you is to try one. They do have a 14-day return policy. I don't have a lot of disposable income (mortgage and a family of four), but I really wanted one and have been waiting for something like this for a long time. So the price of the AW Sport has definitely been worth it to me. Even if I buy a new one in two years without selling the old one, the AW Sport costs me about 54 cents a day or $16 a month. The little conveniences it adds to my life every day are definitely worth 50 cents a day to me. Before I owned the watch I couldn't have imagined spending twice as much on the AW SS, but now I would definitely consider it. In fact I have considered upgrading, but I like the looks of the aluminum sport enough to keep it instead (although I was pretty dazzled by the AW SS with leather loop I tried on in the store). I even like the blue sport band my watch came with (thought I'd hate the sport band), but I have ordered a couple of knockoff leather bands (a leather loop knockoff and a more traditional leather band). So in the end I will have probably invested closer to $550 in my AW Sport (after taxes an third party straps). Yup, still worth it to me.

Sean

 

[terminator-jq]

Business school should have also made you take into perspective the long term. Samsung for example, keep putting out new devices all year round, where as apple tweak their software all year round making their users have constant changes without hardware expenses. Others rely more on the hardware change than anything else. sure they have software updates etc, but nothing that can identify with ANY iOS ever at a keynote.

Sadly this represents "apple tax" at its full capacity. But i believe that if you are wanting a product that you can guarantee the manufacture is constantly altering the software behind, and always innovating your products to suit your lifestyle and sync to other commonly used devices, then you have to pay that tax.

Like stated before, price cuts are not what apple do. They don't need to, they never will need to (not saying they won't), but to them, what is a few people arguing about a price that millions are still willing to pay?

A little off topic but I never understood why us Apple fans feel the need to throw Samsung under the bus at every chance we get. Is it really a requirement that to love one company you have to hate another? Last I checked, Samsung, like Apple, was on a yearly cycle for their major product lines (Galaxy S and Galaxy note). Sure, they have other low budget phones that trickle out throughout the year but those are never given the push that the main devices are given.

I will definitely agree that Apple handles software updates much, MUCH better than Samsung. Although that is not necessarily Samsung's fault sense they are limited by Google's system. However, software support alone doesn't change the fact that $400 for an entry level model is just too expensive. The only somewhat reasonable excuse I can think of for that high of a price is that Apple is using it to make back some of the development cost.

When it comes to Apple dropping prices, they have actually done this quite a few times. They dropped the price of the original iPhone (a 1st gen product just like the Apple Watch), Apple TV, iMac and Macbook Pro models. Usually, the price drop comes in the form of new models which are cheaper than the models they are replacing so perhaps the Apple Watch 2 may come with a cheaper price than the current model.

You say "price cuts are not what Apple does" but I think the past few years have proved that Apple is not afraid to change their traditions. Just think, a few years ago Apple made fun of the Phablet market and today they have one of their own. At the end of the day, Apple is a business and they need to make money. So if dropping the price of the Apple watch by $100-$150 to make it more accessible to more people will bring them more money then you can bet they will do it. A price cut this early might seem a little odd (and it might piss of the early adopters) but just look at what it did for the Nintendo 3DS and Xbox One. In both cases, the products launched at too high of a price and sales fell fast. However, after the price drop sales picked up and stayed high. In fact, the Xbox One has been even beat the PS4 is sales a couple months (as a PS4 fan it hurts me to admit it).

 

[zaquinho17]

A little off topic but I never understood why us Apple fans feel the need to throw Samsung under the bus at every chance we get. Is it really a requirement that to love one company you have to hate another? Last I checked, Samsung, like Apple, was on a yearly cycle for their major product lines (Galaxy S and Galaxy note). Sure, they have other low budget phones that trickle out throughout the year but those are never given the push that the main devices are given.

I will definitely agree that Apple handles software updates much, MUCH better than Samsung. Although that is not necessarily Samsung's fault sense they are limited by Google's system. However, software support alone doesn't change the fact that $400 for an entry level model is just too expensive. The only somewhat reasonable excuse I can think of for that high of a price is that Apple is using it to make back some of the development cost.

When it comes to Apple dropping prices, they have actually done this quite a few times. They dropped the price of the original iPhone (a 1st gen product just like the Apple Watch), Apple TV, iMac and Macbook Pro models. Usually, the price drop comes in the form of new models which are cheaper than the models they are replacing so perhaps the Apple Watch 2 may come with a cheaper price than the current model.

You say "price cuts are not what Apple does" but I think the past few years have proved that Apple is not afraid to change their traditions. Just think, a few years ago Apple made fun of the Phablet market and today they have one of their own. At the end of the day, Apple is a business and they need to make money. So if dropping the price of the Apple watch by $100-$150 to make it more accessible to more people will bring them more money then you can bet they will do it. A price cut this early might seem a little odd (and it might piss of the early adopters) but just look at what it did for the Nintendo 3DS and Xbox One. In both cases, the products launched at too high of a price and sales fell fast. However, after the price drop sales picked up and stayed high. In fact, the Xbox One has been even beat the PS4 is sales a couple months (as a PS4 fan it hurts me to admit it).

Ill never admit the xbox is on par or better than ps4 ahah!!

You make very valid points but the early stages were exactly the same place the business was with its product.... early..
not they are more mature, its strange but we will see what apple does. if anything, they may release new bands with a lesser price tag. I just don't see them lowering their device by $100 just yet as a few people are requesting

 

[Night Spring]

Despite what I just wrote in my previous post, there is one big example of Apple doing exactly that: with the original iPhone. It was a pretty spectacular launch, yet as the early adopter market saturated and production capacities caught up, Apple felt it wise to cut the price of the iPhone by a rather considerable amount.

But wasn't the "price drop" in the original iPhone achieved by moving to a subsidy model for the price? That is, customers got a lower price, but AT&T paid the rest, so Apple still got the price it was originally charging. Or am I misremembering things?

 

[Stetrain]

But wasn't the "price drop" in the original iPhone achieved by moving to a subsidy model for the price? That is, customers got a lower price, but AT&T paid the rest, so Apple still got the price it was originally charging. Or am I misremembering things?

No, they dropped from $599 to $399 without a change in the way plans worked. When the second gen iPhone 3G came out they transitioned to a subsidized model and went from $399 to $199-on-contract.

http://www.nytimes.com/2007/09/07/technology/07apple.html


As far as dropping the price on the watches, that depends on supply vs demand.

According to the information in the earnings call, Apple is still supply constrained meaning they are selling them as fast as they can make them. Why drop the price if you already can't make enough to meet demand?

 

[cambookpro]

I owned an Apple Watch for 3 days and loved every second of it but the functionality of it did not justify the price. I just couldn't justify loosing $400 for a device thats main feature was saving me the few seconds it takes to take my phone out of my pocket. The Watch OS 2 adds some better functionality but it is still not enough for me. A price drop would make me and I'm sure a lot of other people, buy an Apple watch in a heartbeat.

In business school, they teach you that if you market something as a premium product, you can charge a premium price. However, in this case, Apple has gone a little too far. I have no problem paying the "Apple tax" because I know that Apple makes quality products but in the case of the Apple Watch, it is quite frankly a poor value at its current price and I'm not the first nor will I be the last person to say that.

So if you ask me, Apple should be charging:

- $199 for the 38mm Sport model

- $249 for the 42mm Sport model

- $19.99 for replacement Sport bands

I doubt it would ever happen but its certainly more reasonable, especially for their entry level model. Keep in mind, it only cost Apple around $83 to manufacture the 38mm Sport model.

While this may be the bill of materials, I think it's a bit misleading saying that's how much it costs. I'm not saying Apple's margins are small, but you have to take into account years of research and development, labour, marketing, transport, manufacturing costs, packaging, etc.

 

[JayLenochiniMac]

I think they've learned their lesson from dropping the original iPhone's price shortly after debut and pissing off the early adopters. It most likely won't happen until the next model is introduced.

 

[ATS]

I think you'll continue to pay within the same price range for new Apple Watch models once they are released. The older models will see lower price points but they'll be yesterday's wearables. If the cost of any product is an overriding concern, one probably should rethink purchasing that product.

 

[Lennyvalentin]

As others have mentioned, it's not Apple's style to chase sales by dropping prices. Case in point, Apple is perfectly fine with being well behind a manufacturer like Samsung in cellphone sales because they still capture the vast majority of all profits in the smartphone industry. Most manufacturers either make peanuts or outright losses on their phones.

Cutting a hundred dollars off of the sales price to attempt to attract additional purchases doesn't benefit Apple very much when it means nuking their own profit margin. They'll sit at this current level probably for the full year until next model comes out. Possibly some adjustments for the holidays, but I wouldn't count on it. Price discounts puts dents on their premium product label...

 

[KPOM]

Why would they use the sales figures of such an immature market to limit what they know they could achieve given their 1) product and 2) brand position?

Also, if the reports are correct that the sales have significantly dropped, that's another separate issue showing that regardless of initial sales, something about the product is not leading to consistent sales. Why would a business not attempt to correct that but rather accept far lower sales for a long period of time simply because they had a good launch based on their hardcore fans?

Tim Cook said that sales in June were higher than April or May. Granted, some of that could be shipments of pre-orders placed in April or May, but Apple did get lots of watches out in time for the 4/24 launch, so that goes against the reports that suggest a significant drop in sales. More likely the online sales dropped once the Watch was available in stores.

If we see a price drop, it won't be until at least when the iPhone 6S is announced. My guess is that they'll update us on Watch OS 2, perhaps release a few new bands, and maybe, just maybe announce a small price drop for the holidays.