We all know that professional industry analysts often say the darndest things, but the Apple Watch has unleashed some truly muddleheaded commentary, especially from people who get paid to know better.
There are the customary and entirely predictable predictions that the Watch will fail — just as the pundits predicted the iMac, iPod, iPhone and iPad would bomb. This kind of commentary is so knee-jerk and silly, it’s best to just ignore. But then there’s a higher tier of analysis that says the Watch’s success depends on apps (duh, yeah) or the device’s potential for upgrades (completely wrong).
I’m interested in smarter takes on Apple’s strategy, pricing and marketing. Surprisingly, some of the most insightful commentary I’ve seen is on reddit — known generally as a salty hangout for spotty teens and weirdos. Here are some key points outlined by reddit users.
It’s not fair, but reddit isn’t exactly known for brainy analysis. It’s more often associated with fingering the wrong people in amateur terrorism investigations or enabling The Fappening.
But there’s a long thread in the r/apple subreddit called “Apple Watch: $350 – $10k. Apple is out of their damn mind” that contains some very astute commentary.
The gold watch is about aspirational marketing
To me, the most controversial aspect of the Apple Watch is the existence of the 18-karat gold model. It’s clearly priced out of the reach of most consumers, which I strongly feel is antithetical to Apple’s essentially democratic approach to products. It’s always made products for everyone, not the super-rich elite.
But the Apple Watch Edition has a beneficiary aspirational role. The pricey watch creates a halo effect that encourages consumers to buy the cheaper steel or aluminum versions. Kim Kardashian wears the gold watch, which I could never afford, but the aluminum version will do for me. I’ve come to believe that this is the key role of the pricey Apple Watch. It’s an aspirational marketing tool that’s more about selling boatloads of $350 watches than $10,000 ones.
As reddit user hurtmemore explains:
“The thing is, Apple absolutely knows this is nuts. Of course they do. They don’t even care about selling these, this gold version is not about making money or selling the most – the only reason this exists is about public perception of what the Apple Watch is. They want to give it status – and that comes when people see something they can’t have. If a high end, 18k gold, $10k model exists at all – it gives the watch high status and ‘credibility.’ It instantly creates a perception that it may not be for us, but ‘there are people out there’ – extremely rich people, extremely fashionable people – who will wear it. Even if they don’t sell a single one – people are talking. ‘Hey, it’s not just another techie gadget watch, it’s high end, it’s respected, and hey, the steel version is pretty much the same thing.’ It’s all about creating an image of this product being very high end – even if it’s truly just a gen 1 ~300$ digital watch.
TLDR, it’s not at all about selling a 10k watch, it’s about the perception that ‘Apple Watch’ is to be respected as a high end product in society.”
Another point argued by reddit users is price anchoring. This is an age-old technique of assigning value to something by comparing it to something else. Take your house, for example. If you put it on the market, your real estate agent will price it according to the recent sales of other houses in your neighborhood.
Reddit user Drunken_Economist noted how this strategy encourages people to see Apple’s midrange offering as the best deal:
“The Edition is for anchoring — it makes the Watch, instead of the Sport, look like the most attractive price point.”
“Exactly. Restaurants do this all the time, and it is very noticeable with wine and liquor.”
And heidismiles chipped in:
“And steak dinners! ‘$55 for filet mignon? I don’t think so. Hey, they have a $35 New York Strip…'”
Just to make it super-clear, -venkman- added:
“it’s like the extremely expensive steak in a menu. they mostly just put it there that the place doesn’t feel cheap and the other prices seem like a bargain.”
Another recurring theme in the discussion of the Apple Watch is how quickly it will become obsolete. If Apple upgrades the wearable on the same annual basis it’s been updating the iPhone, the second- and third-generation watches will make these launch devices look hopelessly antiquated. To people with a practical bent, the idea of spending $10,000-plus on something that will be obsolete in a year or two is mind-bending.
But as several redditors noted — and I argued yesterday — obsolescence is irrelevant to someone who can afford to spend $10,000. They are not at all worried about protecting their investment. An upgrade or trade-in program would simply devalue the Apple Watch Edition, making it less attractive to the luxury buyer.
Here’s reddit user OscarMiguelRamirez:
“Once you realize that rationality is thrown out the window here, none of what Apple is doing is really that strange. Anyone who knows anything about watches will know the gold version is $$$. Jay Z could still brag about it. To people that care about displays of wealth, a $10k watch you replace every few years is even more impressive.
I don’t understand why anyone would pay $10k+ for a Rolex either, but I don’t say Rolex is “out of their mind.” You can buy knockoffs that look indistinguishable to a layperson, but that doesn’t change anything. These people are not buying these high-end items to impress people who can’t tell the difference.”
And in response to a comment about Rolexes working perfectly after 20 years, redditor legitimateusername3 says:
“That’s because a Rolex doesn’t do anything useful. It’s just a way of letting men buy a bracelet. The Apple Watch isn’t targeted at people who are buying a 10K Rolex thinking it’ll last them twenty years. It’s targeted at people who can buy a 10K watch on a whim.”
How much do you need to earn to afford the Apple Watch Edition?
Good question right? Reddit user Grizzleyt has the answer:
“A person making 50k a year buying a $350 watch is proportional to an Edition buyer earning $1.4 million a year. The Edition is for really, really rich people.”