WHY THE APPLE WATCH PRICE TAG IS A BIG MISTAKE
... AND WHY THE 12 GRAND MODEL IS JUST A GIMMICK
The Apple Watch has finally arrived. The answer to the year-long wait of all Apple followers - the Watch carries a price tag of £479 to £12,000 and allows for a seamless co-existence with Apple's iPhone, including emails, all Facebook and Twitter-related communication, telephone calls and storing personal information. The product is just as elegant and technologically excellent as all other Apple products. It is a logical next step in its product line. Nothing about the Apple Watch is shocking, apart from its price tag.
Apple is the luxury electronics maker. The brand has the freedom to set its prices at a significant premium to its competitors and for a good reason. Their products may not be technologically revolutionary, but they create an overwhelming sense of desirability.
Their design and seamlessness cause addiction to the extent that the customer's switching costs begin to exceed any economic sense. The way in which Apple products operate sets a standard for what we expect. Indeed, a generation of people has emerged that is used to operating the world of electronic devices in an 'Apple-approved' way.
It is for this reason that prices of all Apple products are meaningful - they simply follow the high demand. Making the innovations developed by others technologically superior and aesthetically pleasing is the Apple's virtue. Just like Apple's iPod, iPhone or iPad, the Watch is based on technological solution developed by their competitors and brought to perfection.
In comparison to other Apple products, the Watch has a price tag that goes beyond simple logic. Indeed, there is very little about the £12k Apple Watch that makes it different from the £479 model and certainly nothing in a technological sense - the two are identical. Perhaps this time, Apple has really made a big mistake.
The Last Step
For some time now, Apple has been moving in one direction. The domain of luxury electronics offers only so much price freedom and Apple has reached its potential in it. If there is to be any industry that gives companies the opportunity to draw a line between the real value of a product and its price tag, it must be fashion. After hiring Burberry's Angela Ahrendts, Apple has now made the final step on its journey to becoming a luxury fashion company. Everything about the Apple Watch, including its price tag gives Apple the best prospects to succeed.
The 12 grand Apple Watch is a gimmick. The existence of a super-premium version of the Watch will entice celebrities and those rich enough to be medially exposed to wear one. In effect, Apple will achieve "price framing" - a change in how buyers perceive the entire Watch product line. Whether the Watch proves to be useful, or just another "nice-to-have" accessory does not matter anymore. The aura of aspiration will help Apple to sell many more Watches than their practical potential would suggest.