Pricey gold Apple Watch could make $5 billion per quarter


38mm rose gold Apple Watch Edition. Photo: Apple
The high-end Apple Watch Edition could bring in the bulk of Cupertino's revenue from wearables. Photo: Apple

The Apple Watch Edition has perplexed many Apple fanboys with its ridiculously high price tag. We still don’t know how much the beautiful, high-end smartwatch will cost, but it’s expected be one of the most expensive Apple products ever, which has a lot of analysts wondering, how many is Apple going sell?

The Wall Street Journal reported yesterday that only 17 percent of the first 5 million Apple Watch orders were for the pricey gold Edition. That number sounds almost insignificant, but Daring Fireball’s John Gruber did some math and found that Apple is expecting to sell about 1 million of the exorbitantly expensive timepieces per quarter.

Hitting 1 million in sales for the super-expensive smartwatches in the first quarter would be an impressive feat. But what’s more surprising is that if Apple actually hits that number, the gold Edition Apple Watches would account for the most Apple Watch revenue, bringing in at least $5 billion per quarter.

Here’s why:

“Apple Watch revenue will be dominated by the gold Edition units, accounting for double or more of the revenue from all the other models combined. The Edition models would thus do to the Apple Watch lineup as a whole what the iPhone, iPad, and Macintosh do to the entire phone, tablet, and PC industries, respectively: achieve a decided majority of the profits with a decided minority of the unit sales.”

According to Gruber’s estimates, if the average sale price of the Edition units is $5,000, that’s $5 billion in revenue per quarter — just from the gold models. If the price is $10,000 — which is totally possible — Apple Watch revenue would double.

Essentially, the gold Edition Apple Watch is the most important version of the new smartwatch if Apple wants to turn this into another multibillion-dollar profit source. The Sport edition is priced at $350 and will only make Apple $1 billion per quarter if they sell 3 million units. The stainless steel units could add an additional $2 billion per quarter if it’s priced around $1,000.

Source: Daring Fireball

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  • ericbrady

    I can’t see Apple placing these unrealistic profit margins on a gold edition (compared to the sport model) just because it is made with gold. Not like this will become an heirloom type watch, it is a first generation digital gizmo that may become a useless antique sitting in a dresser drawer in less than 6 years while the next edition of Apple Watch will be much more thin and have 5 times the memory with lots more functions. Besides the stainless version looks just as nice.

    • CelestialTerrestrial

      Currently, 18K gold is $900 an ounce. How many ounces do they start with before they start the milling process for the case? That’s just the raw materials cost just for the case without anything else. I’m sure more Gold is milled out that they have to recover to remelt than what they end with.

      • ericbrady

        My point exactly, 40% profit for milling a piece of gold to the shape of a watch is a great return in my opinion and one I hope Apple gets, but to expect $5,000 to $10,000 per watch because it is made with gold seems a bit too much. 2K to 4K sounds more likely to me.

      • CelestialTerrestrial

        Yeah, I know. I just hope the Stainless Steel version isn’t too outrageously priced since Stainless is durable and has a nice polished look.

        What concerns me the most is how often Apple is going to update with new models that are drastically better in terms of functionality. Different styles is not that big of a deal and I’m sure there might be other styles down the road, but it’s the increased functionality that worries me about buying the 1st rev since I’m not rolling in dough to buy one of these things every year or two. I might wait to see what the next model looks like first.