Image credit: Apple
All Apple has given us is that the Apple Watch will start at US$349. It's been widely assumed that's the Sport model. And then, there's been a lot of conjecture about the price of the gold Apple Watch Edition, but I am more curious about the one in the middle with its stainless steel case and sapphire display.
Even though this topic has been mildly explored, it pleases me to ponder some of the ins and outs because the sapphire model is what I'm really after. I had a Rado watch decades ago with a sapphire crystal, and it was amazing. But every watch I've ever had since then has been banged on a door knob or otherwise scratched. That annoys me greatly.
Before we can get at the price of the middle version, let me start at the (presumed) bottom, the Sport model.
Most observers have been assuming that aluminum is less expensive than stainless steel and Ion-X glass is less expensive than sapphire. Apple says that the Apple Watch (generic term) will start at $349, and that likely refers to the smaller, 38 mm, Apple Watch Sport. All bets are off on every other price.
My gut says Apple isn't going to gouge us for the 42 mm version. That suggests an Apple Watch Sport, 42 mm, at $399.
However, unresolved is the mysterious alignment of the watches on Apple's overview page, left to right, Apple: Watch; Watch Sport; Watch Edition. Because it doesn't seem to make marketing sense to charge less for a sapphire display, I'll chalk that ordering up to Apple mischievousness.
Apple Watch lineup.
Next Page: Materials analysis and buyer psychology
Page 2 - Material Analysis and Buyer Psychology
Cost of Materials
Image credit: Apple
From what I've seen on the Internet, the current price of stainless steel is a little over a U.S. dollar per pound. The price of ordinary aluminum is a little less than a dollar per pound. Considering the quantity of metal in an Apple Watch case, only a fraction of a pound, I can't see there being much of a difference in materials cost. Perhaps there is a delta when it comes to the machining cost.
Back when we thought the iPhone 6 might have a sapphire display, I saw these convincing numbers: $35 for sapphire. $3.50 for Gorilla glass. Because the Apple watch display is so much smaller than the iPhone 6 display, it's not likely that the extra cost to Apple is more than $5 for sapphire.
So, while the elegance, gem-like quality and scratch resistance of sapphire has a magical image in the marketplace, eventually iFixit will generate a Bill of Materials, and a huge surcharge for the sapphire model could lead to embarrassment. It's likely that the delta will lie in the upgraded, default wristband and some good-old fashioned marketing about the "desirability" of sapphire as a fashion statement.
Stainless steel is strong, but it's not quite as maleable and elastic as aluminum. Plus, sapphire can be brittle and doesn't do well with sharp, direct impacts or face plants from a height (from reports I've seen). Ion-X glass, I have read, has better impact resistance. Taken together, that's probably why the Sport version is glass and aluminum. So, back to the ordering, left to right, of Apple's website. (See page 1.) Could it be that $349 refers to a 38 mm sapphire version and the remarkable properties of the Sport version merit a higher price?
I think that would be a hard sell because the convention wisdom is "I want the better sapphire." Plus, anyone who thinks they can wear an Apple Watch while playing tennis might think that they don't want to be out big bucks if the watch gets banged up. I could be wrong.
Let's say that Apple's left to right ordering is an aberation, and Apple expects to sell the sapphire version as the mid-level Apple Watch. The apparent quality of the bands in that photo adds credence to that idea. How much would the mid-range sapphire/stainless Apple Watch cost?
The cost of materials delta, in spite of Apple's vast markup, doesn't seem to support even $50 extra. I think Apple will use a combination of a really nice default wristband on the (middle) Apple Watch combined with the magical aura of sapphire to add and extra $100. Thus we have, for the 38 mm sapphire, $449. For the 42 mm sapphire, $499.
One important issue is the need to entice the buyer to spend a little extra money—to make a personal leap. For example, if the sapphire watch were priced at $799, customers would say,
Oh heck. I want an Apple watch for fun, to be part of the crowd. But I can't afford $799. I'll spend $399, get on board, see how things go, and maybe upgrade in the future when the second generation comes out.
And so Apple has to carefully manage that delta from the bottom level to the mid-level so that buyers think it's not much of a stretch. And yet if the delta is too low, it devalues the sapphire and stainless steel awesomeness. That's why I'm thinking that an extra $100 is the right level of enticement. Otherwise, Apple could have a lot of unsold sapphire watches in inventory and lose out on the marketing mystique of that material.
- 38 mm Apple Watch Sport: $349
- 42 mm Apple Watch Sport: $399
- 38 mm Apple Watch: $449
- 42 mm Apple Watch: $499
As for the gold Apple Watch edition, estimates are all over the map, and I won't even go there.
I've presented the best logic I have on materials costs, properties and buyer psychology. Now it's your turn. Tell me what you think in the comments.