Why the $10,000 Watch is essential to Apple’s plan

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Photo: Apple
Photo: Apple

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.