Thursday, March 19, 2015

apple watch pricing

I am clearly not the target market for traditional watches as I had only a vague sense of how much a Rolex or Tag Heuer cost and really no idea at all of what is available in the $500-$1000 range.  The answers: (i) Rolexes and Tags cost a lot and (ii) not much is available in the $500-$1000 range.

Taking a quick look at Tourneau, I think Apple will have no problem with its pricing.  The $500-$1000 space is largely filled with low/middle end names and undistinguished details.  Not a knock on those brands - Apple has no name in watches and, of course, cannot have meaningful detail on the watch face.  But, given a choice between an Apple Watch and most of these choices, I really don't see how Apple can't get a meaningful portion of this market.

Also interesting is that Apple jumps almost entirely over the mass-luxury segment with its pricing - leaving effectively the entire $1100-$10000 range out - and so avoiding going head to head in that segment where you see some detail and have some powerful brands.  Many are trying to paint Apple as competing with those brands.  Given the pricing, that painting is wrong.

Apple isn't trying to beat Rolex or Tag Heuer (at least not yet).  Apple is going after Tissot, Hamilton, etc.  Modest graduation gifts.  Upper-middle class gifts.  iPod level gifts.  Apple is going to get a lot of this market, especially anyone who doesn't wear a watch today (and who owns an iPhone, of course - but that is a 400 million strong number).  And it is going to crush in the $350-$500 range with the Sport where there is no competition at all.

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