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Apple tends not to lower their prices. Instead, they offer newer models will with more features at stable price points.

If prices do drop (e.g. the 5s) it's because an older product is still being sold alongside a newer one at the standard price.

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This is not the case with first run products. The original iPhone's price was $599 (8GB) and $499 (4GB) when it was released in June 2007. Then in September of the same year they discontinued the 4GB model and dropped the price of the 8GB down to $400.

I'm not saying that they will drop the price of the watch but there is a history of them doing this with the first run of a product. Also someone mentioned they did something similar with the MBA in this thread.

Good point, though I think that few people paid that directly. From what I recall, base models have been $200 with a two year contract from the word go.

Nope, people who paid $600+ for an iPhone still had to have a two-year contract, they didn't even get compensated for it with a subsidy. And at the same time that you paid $600, AT&T was giving Apple a cut of the contract, something like 10 bucks a month from your AT&T bill went straight to Apple in the beginning. So Apple was really getting around $840 per iPhone over the life of the contract, $600 up front and $10/month for 24 months.

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