Apple clearly chose to target the top end of the market. They didn't hire Marc Newson and Angela Ahrendts to make Timex Ironmans. Apple has long positioned itself as a premium brand and has no problems convincing people to pay 2-3 times for products (computers, phones, tablets). The watch will be no different. Those that can and are willing to pay will buy them. Those who can't or aren't won't. There are plenty of other smart watches out there at the low end of the scale.
It's not clear yet since most of this has been predictions and speculation but I see what you're saying. The problem is this is a smart watch, not a mechanical watch. As apple stated, "Our goal has always been to make powerful technology more accessible." The higher end competition is around $350 bucks. Heck, I'm even cool with a 3x apple up-charge at almost $1,100 bucks. But at a $5,000-20,000 price point you're looking at 14-57 times the highest priced competition?
You want to throw Angela in there and argue the designer standpoint? You can buy an array of burberry watches for $350 bucks and up right at Macy's and not one exceeded $4000. And those watches don't go obsolete in a couple years or have future compatibility problems.
Low end of the scale? So I guess all you have to do make a $20,000 watch is take the exact same $350 sport fitness model, same internals, cover it in gold, and slap a new band on it.
Doesn't make sense to me at all. Not saying you're wrong but I just strongly disagree if Apple takes that approach