I was thinking about that myself. It's such a huge and complex decision. I assume they have teams of experts working on it. McKinsey types.
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Gruber is tripling down on his price predictions
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I was thinking about that myself. It's such a huge and complex decision. I assume they have teams of experts working on it. McKinsey types.
Still, at $700 that suggests an "everyman" watch. $1000 isn't that much if you expect to hold onto it for a few years, which I think is Apple's expectation.
Guys, what if we're looking at this all wrong? What if Gruber's estimates are way, way too low? Apple makes billions in profits right? So if Apple Watch is going to "move the needle" they're going to need to make billions more. Here's how they will do it.
Apple Watch Edition will cost... 1 billion dollars.
Ok, follow me here: We've already made some basic assumptions. 1) Apple iSheep will pay anything to get their Apple toys. 2) Apple customers are incredibly rich, 3) Apple will do anything to make more money.
So Apple could sell its Apple Watch Edition at $5-10k, but they would need to sell thousands to make billions of dollars at that rate. If they sell thousands, it won't be "exclusive" and thus the value will go down. If they only sell 10 Editions, that's 10 billion dollars, and people will pay because the Edition will be extremely exclusive.
Can't afford the Edition? Just get a better job, since people don't actually look for the best paying job they can get from the start.
Or just get the Stainless Steel model. At just 1 million dollars it's a bargain really.
Apple Watch Edition will cost... 1 billion dollars.
Ok, follow me here: We've already made some basic assumptions. 1) Apple iSheep will pay anything to get their Apple toys. 2) Apple customers are incredibly rich, 3) Apple will do anything to make more money.
So Apple could sell its Apple Watch Edition at $5-10k, but they would need to sell thousands to make billions of dollars at that rate. If they sell thousands, it won't be "exclusive" and thus the value will go down. If they only sell 10 Editions, that's 10 billion dollars, and people will pay because the Edition will be extremely exclusive.
Can't afford the Edition? Just get a better job, since people don't actually look for the best paying job they can get from the start.
Or just get the Stainless Steel model. At just 1 million dollars it's a bargain really.
It's kind of hard to tell in this photo but it looks like Cook is wearing a SS watch with Sport band.
If you go into Apple expecting to buy the $700 stainless steel, Apple can "upsell" you to the modern buckle or loop buckle version for $1000. They can also sell you multiple sport bands in different colors. Plus, if the black sport edition is, say $100 more than the aluminum colored version, they can upsell to that one.
Hmm..will be interesting to see how Apple sells an accessory to the iPhone that costs more than the iPhone itself.
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But that's going under the assumption that people are willing to spend $300 more for SS and saaphire. I'm not convinced.
Note that there is only a $1,000 price differential between these two, despite the men's version using more gold. Most of the price is the cachet, not the gold.
We'll know in about 16 hours what the real prices are. It's entirely possible that Apple didn't reveal pricing in September because they hadn't settled upon it yet. I think you are thinking about the Apple Watch as technology, when Apple wants you to think about it more as a fashion item. The people who wear stainless steel watches to the office are generally the type who will pay $1000 for it.
The real question isn't whether techies who are willing to pay $349 for a Sport can be upsold to the Stainless Steel. They probably won't. The question is whether people who are paying $1000 for a Tag Heuer or Tissot will buy an Apple Watch.
For the entry level SS 38mm sport band version, yes! $549 for the 42mm version.
Even if you are right about that for the base stainless steel model, that still leaves the question about what the other variants will cost.
I CAN'T WAIT THAT LONG!!!
I don't think there are enough of those in the world for Apple to sell in the volumes they want to sell.
I don't think they will. They're two completely different products. They both just happen to tell the time and be attached to your wrist.
That's the trillion dollar question, I guess. People didn't think that Apple could sell a "big iPod touch," either. I'm guessing that this won't be a blockbuster, but could be a modest success. If they can get 10% of iPhone owners to buy an Apple Watch of any kind, it will be a success. For mix, we are probably looking at 60-70% buying the Sport, 25-35% buying the stainless steel, and 5% buying the Edition. That 5% will represent about half the profits.
I'm thinking of Watch as what will iPhone owners pay for it. Is there a large enough percentage of iPhone owners that will pay $1K for the SS Watch?
Internet Trust me
I'll be honest with you $599
Believe me when I say $799
To tell the truth $399
I haven't seen anyone reference this particular part of Gruber's post.....
"Im out on a limb here, and its quite possible Ill be serving up some home-cooked claim chowder Monday. Every single number above other than $349 is truly just a guess on my part. My predictions are way higher than almost everyone elses"
At least he acknowledges this is all guesswork and opinion. He has no more information than any of us, and is just constructing an argument based on his own interpretations. Hopefully his guesswork won't prove to be coincidentally correct!
"Im out on a limb here, and its quite possible Ill be serving up some home-cooked claim chowder Monday. Every single number above other than $349 is truly just a guess on my part. My predictions are way higher than almost everyone elses"
At least he acknowledges this is all guesswork and opinion. He has no more information than any of us, and is just constructing an argument based on his own interpretations. Hopefully his guesswork won't prove to be coincidentally correct!
There are about 320 million iPhones out there compatible with the Apple Watch. Figuring some duplication (some people with 2 or more iPhones, perhaps a 5 and a 6), that's about 270-300 million owners. Will 5-10% buy a watch of any kind over the next year? Perhaps. I'm thinking the mix is 60-70% Sport, 25-35% Stainless Steel, and 5% Edition.
Well done. "It's all about those Bands, bout those Bands, not Stainless."
It won't be about the bands if the starting point is $700.
http://en.m.wikipedia.org/wiki/John_Gruber
JG Guess v1: AWE will start at $4.5k
Media and Tech Fans: *crickets*
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Sorry, I usually stop at that word too. But seriously, you only had to read 1 more line until you saw that I was being sarcastic.
The problem with all of these high price predictions is that they're based on backward thinking. Why do people assume Apple has to "compete" with other watch retailers at all? Apple isn't making a Rolex or a Tag, they're making an Apple Watch. The pricing and margins don't have to match those of jewelry retailers.
And if Steel and Gold are upsells, then Apple is shooting themselves in the foot with the Sport which will cannibalize the other two at the prices Gruber and others are suggesting.
It's simple math. Let's just focus on pricing of the Steel for a second. Let's say it costs $150 to manufacture the Sport and $200 for the Steel. 1000 customers walk into an Apple Store hoping to buy a Steel, and Apple can choose to price it at $500 or $700. At $500, the Steel will make $300 in profit, while at $700 it will make $500. The Sport at $350 will make $200.
If all 1000 would buy the Steel at $700, then Apple will make $500,000 in profit, which is better than the $300,000 they would make at $500. But how many people would buy at $700? How many at $500? If 900 would buy at $500, then Apple makes $290k, but if only 200 would buy at $700, Apple only makes $260k.
What we don't know is 1) how much each costs to manufacture and 2) how many people would still pay Gruber's suggested prices versus more conservative estimates.
But Apple probably has a good idea, and they are masterful marketers not just in terms of advertising, but in terms of pricing their goods to maximize profits. That's why some think Gruber's estimates are too high. From the numbers I've put together (not those above, I simplified things greatly), I too disagree with Gruber. Not because I hope Apple charges ME less, but because it offends my business sense.
I disagree. $700 for a watch is not unreasonable, particularly given the technology. Spending another $300 for a dressier band seems reasonable.