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The Real Reason Why Apple Is Releasing Different Models

D

donster28

macrumors 68000
Original poster
Oct 5, 2006
1,726
811
Great White North
Don't you guys and gals think the real reason why Apple is releasing the more expensive Stainless Steel and Edition watches is because they actually want to sell more of the cheaper Sport version?

Take a look at it this way:
1. If Apple released the Sport version only and priced it the same, would you think they will sell more of it, considering you can buy other alternatives way cheaper, like the Pebble...and the rumours of the Moto 360 working in IOS makes this even more interesting? I mean, the Sport version is still $500+ here in Canada...that's a lot of dough. There's no way they would have sold it cheaper, knowing the price of R&D and well, they're Apple.

2. Including the Stainless Steel in the mix only expands the reach of the cheaper Sport version to more people. How many times have we heard of folks changing their minds and going for the Sport version instead. Reason: these folks know an update is eventually coming and this does not justify spending more. Bait and switch anyone? ;)

3. By including the Watch Edition, Apple created a lot of happy Sport version owners. How many folks want to own a genuine Rolex watch but can't really afford it...hands please? Well, either you go for a replica or have a rich uncle give you one, you're out of luck. It would've been nice to have a choice of the same watch with none of the gold and bling at a more affordable price, would't it? That's what Apple did here. You get the same shape and functionality in a Sport version as in the Edition.

Now discuss amongst yourselves folks...still plenty of time to spend before our precious watches arrive. :)
 
This idea was discussed before in a podcast I heard a few weeks ago, and I agree.

What have the headlines been about since the March event?, the $17,000 Apple Watch. This same concept happens in the fashion industry, celebrities wear expensive clothing but the same designer will make a version that is affordable and now all the sudden you feel like your getting something luxury at a reasonable price and people respond to that.

With the Apple Watch people have this idea that their watch does the same thing as the $10,000 or even the $600 model but only at $399, now you feel like you're getting something premium at a reasonable price.

Most of the comments I have heard someone always has to say "I just can't justify paying that much", people with money don't have to justify their purchase but someone on a budget will now say to themselves $10,000 is way to much, but at $400 or $600 I can justify that. When the Moto 360 was released I heard many people say "$350 is too much, I'll wait for the price to drop." With Apple $350 is the low end, so when you see all the price options $350 all the sudden doesn't seem as bad.
 
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It's because they want people to have options. That's why they have 35 different watch/band combinations, and that's not even taking into account swapping bands later on.
 
boshii said:
You don't think the same people that ordered the sport would have done so anyway without the stainless steel and gold versions existing?
Click to expand...

I'm no thinking that, I'm thinking about 'selling more'.

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saving107 said:
This idea was discussed before in a podcast I heard a few weeks ago, and I agree.

What have the headlines been about since the March event?, the $17,000 Apple Watch. This same concept happens in the fashion industry, celebrities wear expensive clothing but the same designer will make a version that is affordable and now all the sudden you feel like your getting something luxury at a reasonable price and people respond to that.

With the Apple Watch people have this idea that their watch does the same thing as the $10,000 or even the $600 model but only at $399, now you feel like you're getting something premium at a reasonable price.
Click to expand...

Exactly.
 
donster28 said:
Don't you guys and gals think the real reason why Apple is releasing the more expensive Stainless Steel and Edition watches is because they actually want to sell more of the cheaper Sport version?

Take a look at it this way:
1. If Apple released the Sport version only and priced it the same, would you think they will sell more of it, considering you can buy other alternatives way cheaper, like the Pebble...and the rumours of the Moto 360 working in IOS makes this even more interesting? I mean, the Sport version is still $500+ here in Canada...that's a lot of dough. There's no way they would have sold it cheaper, knowing the price of R&D and well, they're Apple.

2. Including the Stainless Steel in the mix only expands the reach of the cheaper Sport version to more people. How many times have we heard of folks changing their minds and going for the Sport version instead. Reason: these folks know an update is eventually coming and this does not justify spending more. Bait and switch anyone? ;)

3. By including the Watch Edition, Apple created a lot of happy Sport version owners. How many folks want to own a genuine Rolex watch but can't really afford it...hands please? Well, either you go for a replica or have a rich uncle give you one, you're out of luck. It would've been nice to have a choice of the same watch with none of the gold and bling at a more affordable price, would't it? That's what Apple did here. You get the same shape and functionality in a Sport version as in the Edition.

Now discuss amongst yourselves folks...still plenty of time to spend before our precious watches arrive. :)
Click to expand...

I think they just want to make more money. Typically, the more expensive models are significantly more profitable.... especially with electronics.

We know that it does not cost Apple anywhere near $100 to bump the memory in an iPhone from 64GB to 128GB.

Small televisions have razor thin profit margins. Large televisions have thousands of dollars in profit.

I haven't seen any analysis on the cost to produce the apple watch. But I would guess the markup for might be something like this:

Sport Watch: 100% markup
SS Watch: 150% markup
Edition: 1000% markup

And that's all fine... I almost purchased a Sport edition until I realized it didn't have the sapphire screen. And after seeing the watches and trying them on, I am happy with my choice of a SS with sport strap, and I have a Milanese strap coming in May....

People have different reasons for wanting the various different models... and some people just can't afford to spend over a grand for a SS with the link bracelet. Just like Ford makes a base model F150 for 20 grand or the Raptor for 60.
 
kovey said:
This is completely bunk "logic". Yes, the watches are selling well. No, it's not because of your inane "reasoning".
Click to expand...

You're absolutely right! They're selling well not because of my reasoning. They're already selling because of Apple's reasoning, which I can understand completely. :)
 
It's selling the most because it's the cheapest. Simple as that.

The best selling version of any Apple product is the cheapest one.
 
I find it funny that the most expensive version of the watch will, in the majority, be given away to celebrities who can easily afford it, as free promotion.
 
donster28 said:
Don't you guys and gals think the real reason why Apple is releasing the more expensive Stainless Steel and Edition watches is because they actually want to sell more of the cheaper Sport version?
Click to expand...

No, I don't think that is the "real" reason for releasing the Steel and Edition Watches. There are quite a few reasons that Apple has made three major categories of Watch; for instance, Apple has made it clear that they want the Apple Watch to be seen as a viable fashion accessory, and an all-aluminum Watch line would not be conducive to that idea. They're trying to cater to a wider consumer base than just the tech enthusiasts who would be happy to "settle" for an aluminum Watch; Stainless Steel, for example, is a pretty common material used for housing watches, so they would be almost foolish to avoid doing so as well if they really want to be seen as a viable alternative to the standard watch.

When you consider R&D and manufacturing costs, it makes no sense that Apple would specifically create higher-end watches just to drive sales of their low-end model. That the higher-cost watches might make the Sport edition seem more reasonable cost-wise may certainly be a factor in consumer decision-making, and Apple certainly knew that it would, but the idea that this is the only reason for the higher-end models just isn't a cost effective way of doing business. If that's truly what they wanted, they could have just released the Sport and Edition models and it would have had roughly the same effect.

As a final thought, you wouldn't make the argument that the 128GB iPhone exists just to make the 16GB model look more appealing to consumers, right? So why apply that logic to the Watch?
 
ZombiePete said:
As a final thought, you wouldn't make the argument that the 128GB iPhone exists just to make the 16GB model look more appealing to consumers, right? So why apply that logic to the Watch?
Click to expand...

Thanks for chiming in. :) Your final thought doesn't jive though because
memory capacity is totally different from the non-functional cosmetic qualities.
 
More likely to allow for the following natural progression:

-A teenager on limited income starts out with the Apple Watch Sport.

-As he gets older and makes more money, he upgrades to one of the SS models.

-He later gets wealthy enough to afford a Patek, but finds himself too reliant on the Apple Watch to ditch it and wouldn't be able to function without it (just like many of us when it comes to the iPhone). So instead of investing in a Patek, he opts for the Apple Watch Edition and upgrades to the newest Edition model every few years (once the old one gets obsolete, i.e., no longer supported by Apple).

This is exactly why Jony Ive gleefully said Switzerland is in trouble.
 
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ZombiePete said:
I wrote a lot more than just that last thought; I guess you can ignore the rest though. ;)
Click to expand...

Didn't ignore the rest...I totally agree with you as your thoughts may be viable reasons why Apple did what they did. I welcome every though because it makes our discussions even more interesting. :)
 
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I know a lot of this is business stragedy. When I worked for my old company, we used to set the prices on many items we bought and resold.
Some tatic was to make them tiered so that the more expensive one made the middle one look better by comparison. And then the low price one was to convince people to upgrade to the better one as it wasn't 'much more'
Seems exactly the tactic here.
 
slvrscoobie said:
I know a lot of this is business stragedy. When I worked for my old company, we used to set the prices on many items we bought and resold.
Some tatic was to make them tiered so that the more expensive one made the middle one look better by comparison. And then the low price one was to convince people to upgrade to the better one as it wasn't 'much more'
Seems exactly the tactic here.
Click to expand...

It's sneaky but yup, that's business. :)
 
Or perhaps they came out with stainless steel and gold watches with in various sizes and band choices because certain people would prefer to have different options? :rolleyes:
 
People don't make decisions objectively, only relatively. Having a higher priced model makes the lower one seem more like a deal. Any marketer knows this. But that's not the real reason. The real reason is to have the higher end models around is to sell them. If a multimillionaire wants to buy an Apple Watch and you only have one for $400, when they would easily pay $10,000, that's leaving money on the table. When you have only cheap models you're effectively saying "we don't want you to pay us any more than this." When you give money to a university, you can pay to get your name on a brick, on a classroom or a whole building. The university would be stupid to only sell bricks. Game publishers make special editions not to sell more retail copies, but to give a reason for superfans to pay more. Car companies make supercars. Airlines have first class. It's just convexity.
 
KPOM said:
Or perhaps they came out with stainless steel and gold watches with in various sizes and band choices because certain people would prefer to have different options? :rolleyes:
Click to expand...

The more options the better indeed, but in business you've got to have a big seller that'll carry your other products. :)
 
ZombiePete said:
No, I don't think that is the "real" reason for releasing the Steel and Edition Watches. There are quite a few reasons that Apple has made three major categories of Watch; for instance, Apple has made it clear that they want the Apple Watch to be seen as a viable fashion accessory, and an all-aluminum Watch line would not be conducive to that idea. They're trying to cater to a wider consumer base than just the tech enthusiasts who would be happy to "settle" for an aluminum Watch; Stainless Steel, for example, is a pretty common material used for housing watches, so they would be almost foolish to avoid doing so as well if they really want to be seen as a viable alternative to the standard watch.

When you consider R&D and manufacturing costs, it makes no sense that Apple would specifically create higher-end watches just to drive sales of their low-end model. That the higher-cost watches might make the Sport edition seem more reasonable cost-wise may certainly be a factor in consumer decision-making, and Apple certainly knew that it would, but the idea that this is the only reason for the higher-end models just isn't a cost effective way of doing business. If that's truly what they wanted, they could have just released the Sport and Edition models and it would have had roughly the same effect.

As a final thought, you wouldn't make the argument that the 128GB iPhone exists just to make the 16GB model look more appealing to consumers, right? So why apply that logic to the Watch?
Click to expand...

I agree with this.
 
kovey said:
This is completely bunk "logic". Yes, the watches are selling well. No, it's not because of your inane "reasoning".
Click to expand...

Times one thousand!!!!
Thanks for being the voice of reason.
Lol, I was afraid to reply to this thread, for fear I was on an episode of punk'd.

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donster28 said:
Didn't ignore the rest...I totally agree with you as your thoughts may be viable reasons why Apple did what they did. I welcome every though because it makes our discussions even more interesting. :)
Click to expand...

Especially since his supposition makes sense & is grounded in reality...
 
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