Tuesday, March 10, 2015

Thoughts on the Apple Watch

The Apple Watch's Insanely Great Economics (Wired)
Apple, with its $650 cellphones and $1,500 computers, already makes perhaps the fifth or sixth most expensive item in a high-income household, right behind furniture, luxury goods, TV’s, cars, and homes. And guess what? They’re now in the luxury goods business. There are rumors that they’ve been trying to make a TV for some time. Reports suggest they are investing heavily in making a car. These are high-ticket items, and that’s why the most important thing the Apple Watch might do for Apple is get us used to the idea that Apple makes goods worth spending many thousands of dollars on. More to the point: goods which, like TVs and Cars, are meant to last not just a couple years, but perhaps ten years and beyond. If the Apple Watch is even a modest success among luxury consumers, you can bet the company will be that much more confident about moving into categories such as cars.

Publicity image of the high-end Apple Watch

As the article notes, it's a sign of Apple's power in the marketplace that the company can even consider simultaneously issuing versions of the same watch from $350 to $17,000--and sell a few of each, no doubt.  At $10,000, the gold-plated version of the new Apple Watch competes with Rolex.  Frankly, I can't imagine trading from a Rolex to an Apple Watch, even a gold-plated one, but if Kanye does it, I have no doubt that others will follow.

Fact is, I have friends on Facebook who've already marked out over the high-end version.  We'll probably see a half-dozen at the 20th Reunion of my class from West Point.  Why?  Because West Pointers are competitive bastards, and you have to have serious cash to consider purchasing a $10,000 watch.

That's the whole point.

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