Why the Apple Watch Needs to Be Expensive

Apple Watch with Link Bracelet (Apple, 2014)

This morning at 10 am Cupertino time in California, Apple held a keynote event at the Yerba Buena Centre. The company unveiled ResearchKit (an amazing way for health professionals to launch global medical research projects via iPhone) and a sexy Retina MacBook that reinvents notebook design. Impressive as both of these announcements were, the hot topic on everyone’s minds was the Apple Watch, and more importantly, when it would be made available and for what price.

Well, now we have the answers.

The Apple Watch Sport starts at AU$499 (US$349), leading up through the middle Apple Watch range all the way up to the ceramic-strengthened gold Apple Watch Edition, which at its most expensive hits AU$24,000 ($US17,000). There is a great variety of models in anodised aluminium, stainless steel and strengthened gold finishes, each with a multitude of customisable/interchangeable bands at a range of prices. Rather than list them all in this post, you can view the prices here at the American Apple Store or here at the Australian store.

There was an expectation from many in the tech and fashion communities that the watch would be priced quite high, but many still seemed surprised about the price of the bands. For example, an über-desirable Milanese Loop band costs $AU299. If tech fans are surprised, just imagine the reaction from general consumers who don’t wake up at odd hours around the world to view Apple keynotes.

Apple Watch with Milanese Loop (Apple, 2014)

In all honesty, I think that the Apple Watch needs to be expensive. Apple’s choice of high pricing is incredibly clever for two major of reasons. The first reason is the watch’s power to challenge the existing timepiece industry. Whilst I would argue that AU$499 is stil incredibly accessible as a starting price,  higher prices as you ascend through the range reflect the level of functionality, customisation and impressive manufacturing processes that Apple is bringing to the industry. No other watch (smart watch or not) can do what Apple Watch can currently do, and definitely not with the same finesse and integration with existing devices, whether they be smartphones, home automation kits or medical devices. Add to this the fact that the Apple Watch is the most accurate timepiece ever created (within +/- 50 milliseconds) and you have a truly compelling product. The Apple Watch needs to be expensive to reflect its capability and challenge existing watches effectively.

The second reason is one that I believe has been talked about less, and is just as important, if not more important: branding. The Apple brand has always historically been one for creatives, professionals and those with discerning taste. It sounds snobby, and I’m no real creative professional, but it’s true. Film studios and professional photographers, for example, generally prefer Apple’s offerings. Even through Apple’s dark years in the late 1990s when they were mere months from bankruptcy, there was a kind of ‘elite’ Apple user and developer community which stayed impressively loyal to the company.

Since returning to success (ridiculous success, at that), Apple has won over many more users and new fans through its desktop and mobile products and services. Whilst remaining more expensive than the competition in general, the company has reduced prices gradually to make their offeringsmore accessible. One of the major potential side-effects of this, interestingly, is a dilution of brand exclusivity. Democratisation of technology, whilst empowering for the masses, can spell trouble for the companies that provide it. Apple has gone from exclusive underdog to global powerhouse. When exclusivity disappears, people who are more interested in status than function and design (brand-switchers) start to look elsewhere. In the tech and fashion industries there is always the threat of someone newer, bigger and better just around the corner.

Apple Watch, as a expensive product with a huge range of uses, reinvigorates the Apple brand with exclusivity and desirability. This isn’t just a tech product, it’s a highly-customisable fashion accessory as well. I may be incorrect, and time will tell, but I predict that the Apple Watch will be a success. People may complain about some of the prices now, and Apple may end up making some adjustments, but all-in-all, human beings are social animals often hell-bent on impressing others or appearing better than others. Those who don’t jump straight onto the Watch because “there’s no real use case”, “it’s a just a pretty toy”, “I don’t need this” or “it’s too expensive” (all of which were said about iPods, iPhones and iPads), will soon start to see others wearing them. They will probably end up wanting one too. If they choose not to buy an Apple Watch and instead decide to purchase a competitor’s offering, then that’s also a good thing. Purchase of any new wearable technology breeds competition, new development and the growth of the category.

This all being said, the Apple Watch is no iPhone. I don’t think we can expect sales anytime soon that quite approach those of the iPhone, largely because the cost of an iPhone is generally spread out for most people over a two-year contract. I believe, however, that super-high sales are not the most important thing (at least at first). Apple is very future-focused though, and is happy to cannibalise its own products with new ones. It may sound ridiculous, but the watch could supplant the phone in years to come. What is important now, however, is that the Apple Watch instils further desire and design excellence into the Apple brand, which at this stage no other company can match.

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