apple-watch

The announcement that the Apple Watch Edition will start at $10,000 and be priced all the way to $17,000 when it begins shipping April 24 perplexed many. Apple is a consumer electronics company. Why is it trying to jump into the luxury space?

Here’s your answer. On Thursday, Andreessen Horowitz analyst Benedict Evans penned a blog post on why Apple is bothering to sell the Apple Watch Edition. It’s full of some brilliant analysis of the new, luxury product, but it boils down to something simple – it’s a marketing tool for Apple.

Apple stores are huge rich-media billboards on every major shopping street in the developed world: I can’t think of any other company that has shops as big as that in such premium locations in as many places. Apple retail is a self-funding marketing operation. So too, perhaps, is the gold watch. Apple might only sell a few tens of thousands, but what impression does it create around the $1,000 watch, or the $350 watch? After all, the luxury goods market is full of companies whose most visible products are extremely expensive, but whose revenue really comes from makeup, perfume and accessories.

The gold Apple Watch Edition is a way for Apple to put attention on its less expensive Apple Watch offerings. Apple doesn’t even plan to sell a ton of the Edition watches, as the company has already said they’ll be available in limited quantities.

Evans compares the Apple Watch Edition to other luxury goods/brands:

You sell the $50k (or more) couture dress (which may be worn once), but you also sell a lot of lipsticks with the brand halo (and if you think Apple’s margins are high, have a look at the gross margins on perfume). 

The luxury Apple Watch Edition as a marketing tool became even more apparent over the weekend when Apple began hanging back-lit displays for the Edition in its Apple Stores across the globe. Why market a product you’re not planning to sell millions of? It’s in place to create a sense of luxury around the Watch product as a whole.

Evans also points out that at $349, the entry-level Apple Watch Sport is the cheapest price Apple has ever offered a new product.

Source: Benedict Evans

  • WiseBlasian

    When you think about it the world is about the rich giving money to the rich and the poor giving even more money to the rich.

    • 9to5Slavery

      Wrong. Because poor people do not strive for a financial education and the government takes advantage of them. People choose to be poor but want to be rich. People expect to be employees and be wealthy it’s a joke.

      • I doubt the poor choose to be poor.

      • @dongiuj

        It almost sounds like he’s/she’s saying that “people” are lazy and that there’s no unemployment in the world due to other financial problems.

      • 9to5Slavery

        I never said they were lazy or no unemployment in the world due to other financial problem. People go to college for their academic iq not financial iq . I’m not taking about business management or accounting either. majority won’t undersrand

      • @dongiuj

        Are you studying at college now?

      • 9to5Slavery

        I am not studying at college or in college now.

      • I’ll admit that some are lazy. A lot actually. Most most just are not fortunate enough to get the chance to make more money. It’s hard for certain people to make money the right way. Governments do not want everyone to be rich so there will always be poor people.

      • @dongiuj

        I say “people” as some people, I didn’t mean to generalise it as everyone. That would just be ignorant on my part. Sorry, I should have been precise.

      • 9to5Slavery

        Then why are the poor?

      • @dongiuj

        Perhaps unemployment due to company financial problems, like I said earlier? Think about the problems that some people may have if they’re paying off mortgages, a family to take care of and put through college etc etc.

      • 9to5Slavery

        That was a rhetorical question. There is a reason why there is a poor category.

      • Most aren’t even given a chance.

      • 9to5Slavery

        I do agree with you. There are challenges to why some won’t be spoken to because of how don’t have enough. But don’t need to be given a chance. This is the free enterprise. And you are lucky if you do get offer a chance. Most people don’t take action. Your parents, your friends, your friends parents, a lot do not take action. That is why they are still where they are. They are stuck paying debt, instead of paying themselves first. Now, not did I say everybody. But there are few, that do something about it. And very few is why we have so much “the poor is getting poorer, and rich getting richer”

      • Mcdonalds-Bridge Street Weymou

        Are they as lazy as you were in English class ?

      • 9to5Slavery

        Good job do you want a star on the sticker bulletin next to your name? Let me know.

      • There isn’t a straight answer. I will ask you this. What makes you think anyone would want to be poor and or homeless? Who doesn’t want to be able support themselves? Think outside of the box, think about the Handicap and mentally disabled folks too. You saying they have a choice too?

      • 9to5Slavery

        That’s a great question. Why would they want to be poor and or homeless? Nobody chooses to become that of a result. But guess what? Why are they there as the end result in some stages of their life? Or even their whole life? A lot of people want to be able to support themselves, in fact I would say majority. Otherwise they are leaning on their spouses and not growing themselves as to WHY THEY ARE ON EARTH??? This is not directly towards anyone here. You say think outside of the box, but I assure you. That you are possibly thinking more technical, to why it is an excuse for the majority. Some of those have challenges I agree. Do you think the majority are handicap or mentally disabled? No. So with the most sense, they have a higher chance of challenges. But why is majority of America in debt? Why are so many Americans struggling? How come they are in so much debt? Don’t have to answer it.

      • REECON_

        Gotta hav money to make money — I’m guessing you’re middle-lower class in the ranks and feel it MUST be the mean Ol’ Big Brother that is somehow keeping you from the great potential you reallyhave right?? Go work hard, have a degree like the rest of your peers you are going up against and you have the possibility of making enough money to make it to upper-middle class –>

      • 9to5Slavery

        That was a rectorial question. I guess I can see your stance where you are and it’s working hard, not smart. I’m not saying that big brother is why my potential is not reached. That is what you assume.

      • REECON_

        I’ll agree to that — I assumed. You make few good points tho for sure. Good debate:-)

      • Rowan09

        A lot of poor people get the poor mentality passed down for generations. If most poor people got an opportunity to show their worth, they would be better than a lot of rich brats. People are being fooled as if college is the route to being financially successful and it’s just a lie to keep us spending money and being placed in debt with loans. Someone with a credit score of 500 can’t get a loan for $500 but the government will give you a $50k loan for School. The system will keep the system going and once people realize they will start to understand how things work.

      • 9to5Slavery

        You are more wise than many. I finally reached out to someone who is bright enough to have a conversation with.

      • WiseBlasian

        I get your point but the reality is that few will be rich and for the majority of people college is the safest bet. Go tell that person working at macdonalds at 40 that he is living a better life than someone paying a mortgage and having a happy wife and kids. I am sure he will laugh. And btw when talking about the poor I made allusion to the middle class as well in case people didn’t know. We can’t change the system. It always has been like this. You can be lucky and work really hard to be a millionaire good for you but don’t assume everyone can.

      • Rowan09

        Why is College the safest bet when it’s obvious its failing? I’m not anti-College but it does not hold the same allure as it did in the 90s. The system can change but the poor (including the middle class) would want to change it. People are satisfied with being poor for the most part. If you’ve ever traveled from a good neighborhood and see the treatment they get compared to a poorer neighborhood or the “ghetto” it’s astonishing. Poorer people will deal with horrible treatment while the richer neighborhoods will complain, etc. The poor spends the most and keep the country going, yet the rich get all the benefits. If the poor want change it will happen, but they are satisfied with what they have for the most part.

      • Dan

        it’s really not that simple

      • 9to5Slavery

        Then I guess why are some making it very difficult?

    • Franklin Richards

      The inconvenient truth is that someone has to be rich and someone has to be poor. It is an impossibility for humans to live in absolute equal standings because it’s human nature to want to be better than others. And it just so happens that the rich know how to be better than others better than everyone else.
      If given the chance you’d probably do the same. Unless I’m horribly mistaken and you’re an extremely altruistic person then I apologize.

      • 9to5Slavery

        Speak my man speak.

      • Mcdonalds-Bridge Street Weymou

        Or perhaps some of them have rigged the system.

      • Franklin Richards

        No perhaps about it. Power (or in this case wealth) and corruption pretty much goes hand in hand. If you ever gain power you’d probably never want to give it up so you’ll do underhanded things to keep it. Granted there are rare examples of altruistic people but generally we humans are base asses when it comes to self-preservation.

  • Jamessmooth

    Very interesting. Makes sense to me.

  • Nex

    What about the iPods? When the iPod touch 5th gen first came out the 32 GB was $299…

    • @dongiuj

      Need an excuse? “There’s an app….no sorry, fan for that”.

    • deepdvd

      He said “a new product”, but you’re right about iPods. The original 8 GB iPod touch (entry level) was offered for US$299

      • The Apple TV also didn’t cost that much when it was introduced

    • Timothy

      The tv was also $299 at first! And yes, almost all iPods have been cheaper than this price…

  • @dongiuj

    Still don’t see a reason to buy it especially for the price.
    Cosmetics: made to make people “more attractive”. A “smartwatch” doesn’t do that.
    Accessories: stay original since the day you buy it. A “smartwatch” doesn’t.

    • DIesel

      Of course it does, the same way having an iPod back in the day made you cool.

      • @dongiuj

        Hahaha~

  • Matt

    40gb original Apple TV was $299, so you can’t say cheapest price ever for an original product.

  • Jacob S

    Because Apple wants to know how many wackos are out there 😉

  • gittlopctbi

    They are selling to the luxury market because they want paying beta testers in all demographics. 😉

  • Nesar

    People will buy the apple gold edition Watch even if it cost $50000 .
    bcuz people love Apple .
    And Apple knows That!!!!!

  • Tommy Gumbs

    An article from an analysts who is basically giving a textbook reason. Great stuff guys…….not!

  • deepdvd

    The original 8 GB iPod touch (entry level) was offered for US$299… also less than the Apple Watch Sport.

  • Joshua The-Legend Wiebe

    Meh, just wait. Now it’s 17k but next year when Apple watch ver 2 drops, it’ll drop to, most likely 8k

  • Okitavio

    It’s kinda like the BMW i8, a rolling ad for the more affordable electric i3 that people may actually buy.