It’s taken all week, but I finally think I have a pretty good idea why Apple is selling a crazy-expensive, super-exclusive gold watch.
Initially, the very idea that Apple would make something for the one percent seemed abhorrent. What makes Apple great is that it sells affordable luxury to the masses.
Apple’s well-designed and well-made products should really only be for the rich, but they are generally affordable to the middle classes. Apple pulls off the miraculous, selling us BMWs at Kia prices.
This is what makes the gold Apple Watch Edition stand out. At first glance, it’s obviously not a product for us. But even though you and I will probably never own one, the $10,000 timepiece is actually kinda democratic, because it’s all about selling $350 watches to the masses.
Sparking a wearables revolution
We’re at the beginning of a brand new era in technology — the era of wearables. Wearable technology has the potential to transform our lives in mind-boggling ways, and likely will dwarf all the technological eras before it. If we can be persuaded to strap tech to our skin and clothes, this could become the biggest revolution in technology yet. And yet nobody has been able to crack the code and produce a wearable that society will accept.
That’s the problem facing Apple right now. This is a brand new category. No one has made a successful, mass-market wearable. To date, everything has been repellently geeky — Google’s Glass, the Pebble smartwatch and every Bluetooth earpiece ever made.
The challenge is not to get geeks or techies to wear a smartwatch, but everyone else. The key to that is fashion. Apple has to make the watch fashionable.
Who sets fashion trends? The media, and people in the media. Celebrities. Sports stars, musicians, Hollywood.
To get these rarefied individuals to strap on a smartwatch, the device must be luxurious. It must be exclusive and special and something they’d be proud to flash on the red carpet. A $350 Apple Watch Sport with a plastic strap isn’t going to cut it. But the 18-karat gold Apple Watch Edition might.
Apple Watch Edition casts a golden halo
The exclusive gold watch is a marketing exercise. It bathes the lower-priced watches in a golden light, and makes the entire line aspirational. It matters not that most people can’t afford the $10,000 model — its luster and appeal will rub off on the $350 and $500 versions.
It’s obvious Apple is unconcerned about the number of gold watches it sells. It’s exclusive. It’s not about volume. Even if Apple sells tens or hundreds of thousands, the amount of revenue will be peanuts compared to Cupertino’s established businesses. What matters is who buys these high-end wearables. Or more likely, who Apple gives them to in Oscar night goodie bags and as product placements.
It’s not about selling $10,000 watches. It’s about selling millions and millions of $350 ones.
This is how the luxury market works. Companies like Louis Vuitton and Chanel are known for jet-set couture and spendy bags, but the bulk of their revenue comes from selling less-expensive items.
“Most luxury companies make their money from lower-prices accessories and cosmetics,” tweeted Benedict Evans, a venture capitalist with Andreessen Horowitz. He added: “Almost all the fashion brands do accessories, cosmetics, perfume or other cheaper entry points… LVMH makes the real money from $10 lipsticks and $100 perfume.”
Apple’s gold watch is about creating a shining brand halo for the whole line. It wasn’t fair of me to accuse Jony Ive of letting his chauffeured Bentley go to his head. The gold watch is an essential part of the plan to get everyone to wear a smartwatch, and you can’t get more democratic than that.
Check out this week’s CultCast podcast — going up later tonight — where we discuss some of these ideas.
Leander Kahney is the editor and publisher of Cult of Mac.
Leander is a longtime technology reporter and the author of six acclaimed books about Apple, including two New York Times bestsellers: Jony Ive: The Genius Behind Apple’s Greatest Products and Inside Steve’s Brain, a biography of Steve Jobs.
He’s also written a top-selling biography of Apple CEO Tim Cook and authored Cult of Mac and Cult of iPod, which both won prestigious design awards. Most recently, he was co-author of Cult of Mac, 2nd Edition.
Leander has been reporting about Apple and technology for nearly 30 years.
Before founding Cult of Mac as an independent publication, Leander was news editor at Wired.com, where he was responsible for the day-to-day running of the Wired.com website. He headed up a team of six section editors, a dozen reporters and a large pool of freelancers. Together the team produced a daily digest of stories about the impact of science and technology, and won several awards, including several Webby Awards, 2X Knight-Batten Awards for Innovation in Journalism and the 2010 MIN (Magazine Industry Newsletter) award for best blog, among others.
Before being promoted to news editor, Leander was Wired.com’s senior reporter, primarily covering Apple. During that time, Leander published a ton of scoops, including the first in-depth report about the development of the iPod. Leander attended almost every keynote speech and special product launch presented by Steve Jobs, including the historic launches of the iPhone and iPad. He also reported from almost every Macworld Expo in the late ’90s and early ‘2000s, including, sadly, the last shows in Boston, San Francisco and Tokyo. His reporting for Wired.com formed the basis of the first Cult of Mac book, and subsequently this website.
Before joining Wired, Leander was a senior reporter at the legendary MacWeek, the storied and long-running weekly that documented Apple and its community in the 1980s and ’90s.
Leander has written for Wired magazine (including the Issue 16.04 cover story about Steve Jobs’ leadership at Apple, entitled Evil/Genius), Scientific American, The Guardian, The Observer, The San Francisco Chronicle and many other publications.
Leander is an expert on:
Apple and Apple history
Steve Jobs, Jony Ive, Tim Cook and Apple leadership
Apple community
iPhone and iOS
iPad and iPadOS
Mac and macOS
Apple Watch and watchOS
Apple TV and tvOS
AirPods
Leander has a postgrad diploma in artificial intelligence from the University of Aberdeen, and a BSc (Hons) in experimental psychology from the University of Sussex.
He has a diploma in journalism from the UK’s National Council for the Training of Journalists.
Leander lives in San Francisco, California, and is married with four children. He’s an avid biker and has ridden in many long-distance bike events, including California’s legendary Death Ride.
You can find out more about Leander on LinkedIn and Facebook. You can follow him on X at @lkahney or Instagram.
42 responses to “Why the $10,000 Watch is essential to Apple’s plan”
I agreed with Leander’s original article about how ridiculously antithetical the gold watch was to apple. While I still (and I’m assuming he does too) agree with his initial thoughts, I hadn’t considered the marketing aspect at all. I think the other thing that the Gold does from a marketing perspective, is make the other 2 seem way more affordable when you consider that you’re getting the same guts as a $10,000 version. (if you choose to see it that way)
Does it really make the other 2 seem way more affordable or does it still make you think that Apple has lost its mind?
When looking at the other 2, the sport is $400 and the stainless is $600.
Saving $200 by getting the sport, makes getting it seem affordable especially since with the certain bands the stainless can run up to $1000.
The 10k-18k watch is soooo far out of the concept of reality it has no effect of the perceived value of those under it. In the end you don’t think I am smart for selecting the more practically priced watch, you just think the person buying the gold watch is extremely stupid.
I can understand the price point and the fashion BS. Its all worth what you are willing to pay. I’m sure the $10,000 watch will be updated and guaranteed forever. If not just buy a Rolex. Its the same principle.
Leander, I completely agree with you. I have been trying to figure out the reasoning behind this all week. I’m glad you shed some light on this, as it is making more sense from a business standpoint what is happening. I had never thought of it this way, but I see now how Apple is actually using all of this marketing to launch their product ever further than they could have done with just announcing it. That does make more sense. Thank you for the article!
I’m not sure I agree. Part of the appeal of the Apple ecosystem is the fact that if you watched any of the Oscar winners using an iPhone 6, you could say, “hey check it out–that super rich, super beautiful person that everyone lauds is using the exact same device that I have!” And you could feel pretty good about that.
By creating a watch that is far out of reach of the vast majority, you’re making it *less* appealing. Suddenly it’s more like, “yeah, the rich can afford anything they like, while I get the lesser model because I’m obviously substandard”.
That’s not to say they won’t sell many of them. I mean, people still buy VWs even though Oscar winners drive Aston Martins. From a strictly emotional standpoint though, you distance yourself–that’s for ‘them’, this is for ‘me’.
Part of what’s always been so very cool about Apple stuff is that most people can afford the same stuff. It cut across the cost barriers. In fact I’d argue the opposite, saying that the true feat was for Apple to make stuff at affordable price points that even the ultra rich wanted to have and flaunt.
I disagree with your idea that most people will think they’d would get the “lesser model”. I’d think that they would feel that they are getting the same watch without the gold case.
And I agree. Perhaps they wouldn’t think of it as ‘lesser’ by way of technology, but I still maintain there’s now a cavern between what the wealthy and the modest can afford in the Apple ecosystem that wasn’t there before. I suppose that is, in fact, Leander’s point. However his argument is that this is a good thing as it will somehow make the watch more prevalent in the minds of people because the affluent will want to flaunt it, and so the modest will gain mind share because they watch the affluent for cues on what’s cool.
My contention is that it can also work to isolate. There’s loads of people who feel slighted by the affluent, and that number grows as the middle class gets less affluent. If the only differentiator is the case, then why go for an Apple watch? Sure, Apple is increasing mind share, but only in that wearables are now cool, not that the Apple Watch is particularly cool… in fact, the Apple Watch is really for those high up mucky mucks that can afford it. Maybe I’ll just pick from one of the hundreds of other options that do the same thing for less.
Now you could say Apple’s been on that bandwagon forever–at the end of the day a computer is a computer, and the people who buy an 11″ MacBook Air probably aren’t as likely to buy a specced out Mac Pro. But this is the first time in Apple’s history that the gulf in a device class is north of 10K.
I’m no soothsayer, and I very well may be wrong. I’m just saying that this gulf that exists now that didn’t before might backfire on an emotional level for some folks. Instead of thinking that “Oooo… look at what celebrity x is wearing, I think I want one, and wow… I can afford it!” we’ll go to “ooh look at what celebrity x is wearing, I want one, but I’ll never be able to afford that one, so what are my options for a wearable–check it out–this Samsung hunk of crap sells for 100 bucks! Cool, I’ll take that.. after all, I’ll never be able to afford that stuff they make for the rich.”
Someone who is already wearing a $10,000 watch is not going to put on a $350 Apple Watch. Not unless they are paid to and we all see how those kinds of celebrity usually work out. Apple needs fashion leaders like models and movie stars to buy their watches. Making something exclusive for them may be the only way that it will happen.
No one “needs” an Apple Watch. Apple is only going to sell them as jewelry or a fashion accessory. This isn’t like a computer, tablet or phone that within our society everyone needs. The desire to own an Apple Watch has to come from somewhere. I don’t know if this will work but I think Leander has hit on the reason Apple felt the need to go this way.
Well you are wrong. I have a $14,000 Cartier Panther and had an 18K Rolex President. I also have a Van Clef and Arpels 18K gold Tank watch and a solid Platinum Johnson Mathey watch. I am going to buy the Apple Sport watch in black. I have owned the iPhones and iPads since the first of each. I am buying the sport as I think Apple will figure out the battery life by version 2 or 3. It has been interesting to read the comments of people who are not luxury product buyers make seemingly definitive statements about what luxury product buyers will do.
I believe the Gold Apple watch is actually more offensive to those that can afford it because it doesn’t have any real intrinsic value, as if luxury product buyers could be enticed simply because it is made of gold.
The intrinsic value is the same as all luxury items that serve no special purpose to people like you and me. It is a blatant statement that I am rich and better than you. It is the psychology behind all such items.
It will be interesting to see how this plays out. I think most people find the price of the Gold Apple watch ludicrous and any statement that would be made by the wealthy of “being better than” is going to fall flat because millions will be wearing the sport watch diluting that luxury brand message. Most luxury items don’t have an exact copy of an item at a price point the masses can afford with the only difference is a little bit of gold, certainly not one 40 times cheaper.
I think gold is gaudy so even if I had the means I wouldn’t buy one. That would only make the statement that I am willing to wear something I don’t find attractive to make a statement that I am wealthy enough to afford it.
Seriously when you think about it most wealthy people have some serious self esteem issues.
This Apple luxury brand is more likely to backfire than not. I wonder who will be the first victim of ridicule when they are found wearing the gold watch in public?
And it will be made even more irrelevant once people start sending their watches out to be gold plated.
I definitely disagree with you on this one and have to side with Leander. He is right on… This whole thing is much bigger than having regular folks identify with a specific product that a celebrity has. It’s about getting society to accept technology as a wearable.
As Leander mentioned, to date, wearables have been pretty geeky and as a result haven’t really caught on with the masses. The Watch Edition is about creating that golden halo for this new product specifically but it also has the opportunity to really break the mold and show that tech can be fashionable; which it be for people to actually commit to strap it to their body for the world to see.
With the Watch Edition, I’m reminded of all the tabloid magazines & entertainment shows that do segments on how to achieve that designer look for less money. Apple is genius by putting an logo on both the expensive and “cheap” options.
Keep in mind that they’re looking to appeal to the masses with the product; which aren’t the people that review tech blogs. Societal trends are driven by the rich and famous… so once they’re on board with this beautiful wearable technology, the rest will quickly follow.
If it works, it could pave the way for streams of other wearable technology.
“Keep in mind that they’re looking to appeal to the masses with the product; which aren’t the people that review tech blogs.” Oh yes, you are very much “one of the masses.” Techie boyz have a false sense of superiority, manifested in statements like that.
No sense of superiority was intended to be conveyed. Apologies if that’s how it came across. I just meant that most folks aren’t interested in reading tech blogs which is where the bulk of coverage for such a product would normally be found. Apple is looking to reach beyond tech with this approach and reach people that wouldn’t otherwise consider such a product.
But does the watch have to be expensive to be fashionable? Why would it matter if the model in the magazine or celebrity is wearing the gold watch or the sport? Shouldn’t the design of the watch stand on its own because it is a fashionable accessory that can be worn by anyone?
In the end isn’t it all really about the customization in the straps and watch faces anyway? the casing only takes the fashion design half way there, its how you make it uniquely your own that should be the focus and what really matters.
Amen sister.
A very smart take on what is going on within Apple. I suspect that you are correct.
That’s a 180 degree turn in viewpoint from Leander. Did Apple PR call him to stop his anti Apple campaign?
You Mac heads are simply ridiculous. In 1984, I purchased a Kaypro with *dual* double sided double density floppy drives for $1,980. What can you buy for $1,980 these days? Macs have NEVER been economical for the masses. It has always and still occupy the high-end of the market.
How many of you are in the market for a solid gold watch? Right. So you are not missing out on anything.
One of those brands still seems to be aroud. And doing quite well.
If not by the grace of Jobs, Apple would have joined heaping pile of forgotten companies.
Why all the fuss over a gold watch? You folksy cumbia hobbyist are no longer part of the business plan and have not been for quite awhile. Get over yourselves.
I bought my first Mac in 2007. Guess what else happen during that time? Vista
Computers are a commodity. Smartphones are a commodity. Smart watches will soon be a commodity. Focus on the value and the market will be there.
This article nails it. And @dave is right. Now the thousand dollar watch seems like a steal. OR I can say “It’s not the gold one. It’s the next expensive one.” Perception…..
Leander, on the Cult Cast you frequently mention driving your Range Rover and living in a very wealthy community, yet your initial reaction was that it was, “abhorrent,” that Apple would make a watch for the “one percent.”
I’m sure you work hard for your money, and I’m fairly certain that if someday you are a member of that vaunted one percent, you’ll gladly accept your social status as a member of that exclusive club, and buy some really cool exclusive things. No one should begrudge your right to do as you wish with your money. Yet that is precisely what you did to Jony Ive in an article a couple of days ago (although you did say in this article it wasn’t fair of you).
I agree wholeheartedly that Apple has been a democratizing force in the industry, but Apple has always gone after the most profitable segment of every market, and there is absolutely nothing wrong with that. We’ve all benefited from the innovation. Lately, you seem to be assuming the role of class warfare baiter, but your tone of moral superiority over the very wealthy seems to be at odds with your upwardly mobile pursuits.
Be sure to leave your gold Edition at home when out amongst us masses. Wouldn’t appear sporting, old chap.
It seems pretty obvious to me that Apple want to take the actual business of making watches seriously and to pay their dues to history in the field. All serious watch makers produce a range of instruments in a range of materials to suit different tastes and pockets. I collect Brietling Chronographs, I have several Stainless Steel Models, a couple of Titanium ones and one platinum example. I would never buy a gold watch as I personally do not enjoy the material. However to be considered in the same breath as Rolex, Brietling, Omega etc, Apple need to have products that can match them aesthetically and in their own way functional. $10,000-$17,000 is peanuts in the luxury watch market at the moment, when Apple eventually launches a platinum version on that amazing link bracelet then Ill be at the front of the line.
You are comparing a Brietling Chonograph with an Apple watch based on its price alone. So if they raised the price of the Apple watch to $100k would then you say it compares to other watches of that caliber?
The Apple Gold Edition is the Sport watch with a gold casing and that is all. It doesn’t have a pedigree or is it hand crafted, it is made on an assembly line using cheap Chinese labor. I’m surprised as a watch collector you are not offended at the comparison.
Yep, it’s all about fashion, and fashion runs on having up-market exclusive models of stuff only the wealthy can afford and cheaper versions for everyone else. I suspect the gold watches will sell like hotcakes, they’ll soon have waiting lists comparable to Hermes handbags (they’re years long) and similar luxury items due to their limited availability. And they will encourage sales of the aluminium and stainless models very nicely.
Just think, out there somewhere someone is planning a service that will re-anodise aluminium Apple Watches in other colours; in particular shades of gold and rose gold that will look almost indistinguishable from the real gold Apple watches from a distance.
I kind of like the reasoning… I think Leander’s got something there
thank you for the article. I now see their rationale and it makes perfect sense.
I also completely agree. It’s a different version of the Halo effect that Apple uses so well.
As a complete side note but relevant to Apple losing it mind a bit lately, but does the new MacBook even make sense? I get that it is ultra thin but the macbook airs were pretty thin already so what is the actual point of it? how is being that thin an actual selling feature when they had to reengineer things like the keyboard into something people would have to learn to get used to, and seriously, 1 port?
How thin is to thin? when will it stop? why keep making phones thinner when people really want more battery life? its all very perplexing to me.
I love that apple is pushing the edges of technology and design but to what end? is the consumer being served or just the whims of engineers and designers.
The MacBook makes a lot of sense if you do any amount of traveling and need a complete Mac. Every ounce counts when you’re on the road.
But those ounces saved will just be replaced by new wires, dongles and adapters. No product today comes with a USB-C cord. This new laptop is essentially useless without the $80 usb-c adapter. It should have had the USB-C and at least 1 regular USB port. Then slowly phase our the regular usb ports over time.
Your are exaggerating when you say it makes a LOT of sense, it maybe makes a teeny tiny little bit of sense. I am and EDC’er so I carry a lot of things around with me every day that an ordinary person wouldn’t so I understand wanting to lighten the load whenever possible. I just don’t see how this requires a whole new class of macbook, incremental updates to the Airs would have made more sense like they did with the pro by adding the force touch pad.
The Macbook has a much better display and is fanless (no noise, less dust, no wear). The new trackpad is customizable and might acquire useful features from software. That said, only one port (and no thunderbolt) is a very bold statement.
I wish Apple would slice the prices by half. A $5000-$6000 Edition would still be expensive enough for a halo effect, uh, effect, while be in line with a wrist-worn computer. After all, a Mac Pro costs around $5000.
Cutting prices in half might also invite more consumers be more willing (and able) to purchase the Sports and Watch versions.
“It matters not that most people can’t afford the $10,000 model — its luster and appeal will rub off on the $350 and $500 versions.”
You keep telling yourself that while you polish your $350 watch, Leander. If you buy Nissan 370Z for $30k, you can drive around aspiring to own and drive a Nissan GT-R. No one buys a $350 watch aspiring to own the exact same watch in Rose Gold. When you spend twice as much money, you expect to get twice as much product. Only a person with extreme liquidity would pay double for the EXACT SAME CAR in a different color or interior trim. The watches are functionally identical in every way except the material they’re made from. A $10,000 doppelgänger of a $350 watch says “I have money to burn.” We have a name for people like that: Douchebags.
Sorry, but much of this article is written in ignorance of the fashion industry and community.
For one, trends are not set by the “media, and people in the media. Celebrities. Sports stars, musicians, Hollywood.” They originate at the hand of designers, photographers, editors, and stylists. Hollywood elite can push these trends, but they aren’t solidified by them (especially if you actually pay attention).
In terms of a blatant factual error, Louis Vuitton doesn’t make couture.
The handbag part of a fashion brand like Chanel is definitely on the “low-end” of the spectrum. It’s not comparable to couture. (A handbag may be $3,000, but what is that compared to a $100,000 dress from their couturier?) Or even to the ready-to-wear clothing, which hovers in the $1,500 – $15,000 price range. Their entry-level product includes perfume, handbags, makeup (in Chanel’s case), etc. In fact, perfume alone is what drives incredible amounts of cashflow for a bulk of fashion brands. Victor & Rolf is a great example; they stay open and produce couture almost entirely due to their Flowerbomb fragrance.
The $10,000 Apple Watch is absolutely going to sell in greater numbers than any of us expect, but don’t count on it being popularized stylistically by Meisel for an Italian Vogue editorial. An accessory like the Apple Watch simply doesn’t fit every aesthetic, especially in the minimal atmosphere we’re currently inside. You’re not gonna see an Apple Watch on the Celine woman. It sticks out in an era where large accessories are not considered chic.
There are wealthy people that want high quality products that are made of gold, etc. and this is a type of product where you could wear it in a variety of situations. working out, or in situations where you don’t want to wear a high end watch, business use where you want a polished stainless steel look or maybe gold because you are wearing a nice business suit, and wearing a Nike Fit or some cheesy looking small watch looks out of place, or the night out with your significant other where you are dressed to the nine’s and you want to impress and a gold watch like this would fit perfectly. Yeah, it’s not for everyone, but Apple products are sold quite often to wealthy people that would easily spend $10K+ on a gold Apple watch. And there is always Falcon Luxury that is probably going to take the Gold Edition Apple watch, add diamonds, and pump up the price to hundreds of thousands, etc. and they’ll sell to the super rich that are even MORE into high end watches.
Typically, in high end markets like high end audio, furniture, clothes, etc. the top name companies produce their FLAGSHIP model where it’s their ultra expensive, limited product product that gets shown to the media to attract lots of attention, but they sell off it for the lower priced versions. Yes, they will sell the higher priced models, but just not as many. I don’t think Apple wants to be considered just like every other cheap smart watch that’s made from plastic or cheap metal and this places Apple firmly as a top smart watch producer that has a variety of versions ranging from affordable to the high priced versions.
My Swiss timepiece will last me a lifetime if I choose. How long will my Apple Watch last? Between my IPad, iPhone, iMac, I…, I’m way too connected already. Not sure about this one. Sometimes I wish Apple would focus on not just making everything a throw away product these days. Can you even upgrade the hard drive on their new computer even if you send it back to Apple. Sometimes I wish they would remember the people who kept them in business in a different era when the Mac Pro had so much versatililty for expansion. You should not have to spend $3,500 on a computer every 4 to 5 years……. I still have an iPhone 5. The new phones feel cheap in my hand. With their profit margins, I wish a there was the old focus on quality remained.
Are you saying this is the Trickle-Down theory of watches? How well did that work for Republican economists?
Author thinks democracy = capitalism