The Apple Watch’s Insanely Great Economics | Hacker News Reader

The Apple Watch’s Insanely Great Economics

wired.com

47 pointsr0h1n54 comments

It's kinda weird to suck up to Apple by claiming it's a great strategy upfront without there being any proven sales success.

I don't think there is much of a demand for smart watches and the luxury edition will make many people think if they want to support a company that offers outrageously priced products along with normal priced products, as both hipsters that can easily afford apple products and wealthy people might not vibe with a dual strategy like this.

Exactly what I came here to say: it's an albatross. There's nothing compelling about a wrist computer that a pocket computer doesn't already do.

It's on your wrist, for one.

If that was compelling, we would still wear wrist watches to tell the time with. We don't: it's not that much harder to take out your phone.

And anything more information intensive than the time is going to be even harder to access on a watch.

And we still have to keep our phones around anyway - the watch is just a conduit to them.

...and it has less space than a Nomad.

>We don't

Maybe you don't, but we do :)

> If that was compelling, we would still wear wrist watches to tell the time with. We don't

There's more "we" out there than just "you." I wear a $30 digital watch because it's indestructible, compact, accurate, and its battery lasts forever. Carrying a delicate, bulky, non-waterproof phone I needed to charge every day would suck by comparison. Try running, hiking, or doing anything outdoors with a phone, and you'll soon end up with a dead battery or a dead device.

That's not to say that I find "smart" watches compelling. The phone tethering and need to recharge every night make them useless to me. Once they can go a week on a charge and do much more than a normal watch, they may be useful. (Today's GPS watches come close.)

I'll rather have nothing on my wrist... for one.

I'm not going to be getting one, but I'd still be very careful with the "there's nothing compelling about an X that a Y doesn't already do" argument.

One of the Tested guys pointed out there was a big hazard with Apple eroding the feel of it's brand - no matter who you are, if you buy an iPhone then you have the same iPhone as any celebrity.

With the watch...that's only going to be kind of marginally true: you'll have the same electronics package, but there's an importance psychological difference when Apple is also selling the $10,000 Kanye-edition watch in the same store (and has to publicly assign importance to that - they can't do that and then publicly be smug about it being a waste of money).

Legit point.

However I will point out that it hasn't hurt Beats headphones. They are VERY big on celeb' endorsements, but sell tons of different editions/looks. Their brand and ability to sell $14 headphones for $200 hasn't been damaged.

But they don't sell $10,000 headphones direct. And Beats has the same model: "same as the stars use to mix their tracks".

Of course that's complete garbage, but its a much easier sell when the only headphones you sell are an affordable $200-400 range with "justifiable" reasons for it.

Watch doesn't work as a Veblen product because it falls into the uncanny valley of not quite being unaffordable enough.

A $1,000,000 watch in a limited edition of 25 would do much less damage to the brand than a $17,000 watch in a limited edition of ????

Median buyers know that they can never afford $1,000,000 for a watch. So at that price it remains a celebrity fantasy product, and some the fantasy gets reflected onto the rest of the range.

$small-number,000 is - paradoxically - almost, but not quite, affordable. It's not any more expensive than many cars, and people buy those all the time.

But the only extra value is the case and the strap. So it looks a like you're paying a lot to pay a lot, and getting something very mass market for the money.

With a nicer strap and case. But people don't buy watches for the strap or the case.

Now you have an "exclusive" product that isn't producing the right exclusivity signals, but at the same time it's expensive enough to seem gratuitously and irritatingly unreachable.

There's nothing insanely great about this. I don't think Steve Jobs would have done it. (I mean - who knows? But historically, there's good reason to suspect this wouldn't have worked for him.)

The $10,000 version will have limited availability, in terms of watches produced and where you can actually buy it.

Apple Watch will also be available to preview or try on at Galeries Lafayette in Paris, Isetan in Tokyo and Selfridges in London on April 10. Apple Watch will be for sale on April 24 at these select department store shop-in-shops, and at boutiques in major cities across the world including colette in Paris, Dover Street Market in London and Tokyo, Maxfield in Los Angeles and The Corner in Berlin.

http://www.apple.com/pr/library/2015/03/09Apple-Watch-Availa...

The $10k watch will be available to anyone with $10k to spend on it. The 'limited availability' doesn't mean they'll only produce a fixed number of them or whatever. Apple will make as many as they can sell.

Agreed I am told that Burbery was horrified when their trademark check was taken up by chavs - apparently their marketing refer to as this as "The Time".

And £13k for a watch will get you a really nice Rolex but its not that much in terms of the high end watch luxury brand.

And you can hand down your Rolex to your great grand kids not sure the apple watch will last that long.

I've now read that Apple Watch Edition gold has more gold per unit volume (this article, [0]), and less gold per unit volume ([1], [2]). Which is it?

[0] http://arstechnica.com/apple/2015/03/is-apples-real-watch-in...

[1] http://pdfaiw.uspto.gov/.aiw?PageNum=0&docid=20140361670

[2] http://www.businessinsider.com/apple-watch-special-gold-cera...

I think the reality is "more total atoms" and "less gold atoms" per unit of volume. Carat (for gold) is a ratio of mass. If you mix gold with a lighter element than usual you can put a bigger volume of the light element. That what people tell when there is "less gold". The light atom could be more packed if they have stronger chemical bonds, I think it's the case for ceramics. So there is more atoms (gold + others) per unit of volume.

More gold per unit volume than what?

Early reports mistakenly reported that Apple was using a gold-ceramic mix, which would result in less gold used by total weight. However, these reports turned out to be nothing more than speculation, and Apple is apparently using a relatively normal high-end gold jewelry alloy (without ceramics). As such, the Apple watch should contain a fairly typical amount of Gold for it's volume.

I'm pretty sure that Apple uses a very conventional gold alloy with a similar density as other gold alloys. Somewhere on their website they provide the weight of the cases and the bands. A quick back-of-the-envelope calculation shows that their gold is twice as heavy as their stainless steel. They are pretty specific on the steel they use, so we know it's density is 8g/cm^3, meaning their gold is roughly 16g/cm^3. This means their gold is probably a completely normal alloy, not some ceramic composite as some people believe.

We also see their yellow gold models are slightly heavier than the rose gold models, which is expected, since the silver/copper ratio is slightly larger in yellow gold, and silver is denser than copper.

Sources: http://robservatory.com/the-all-in-one-apple-watch-spreadshe... http://leancrew.com/all-this/2015/03/apple-gold/

"We’re okay with one brand making everyone’s cellphones, because no company could do so without enormous scale"

Is this claim backed from any market figure? I believed there are far more Android phones than iPhones.

Anyway, most of the reasoning in the post is sound but I wonder how a smart watch (Apple or anything) will appeal to people that grew up without wearing watches (it's been only a fashion statement in the last 20 years) or decided to do without it (like me since the beginning of the '90s, there is always a clock around). Is this market really going to be as large as the one for phones?

You didn't think about what you said. Yes, Apple only has a small market share but they are one of the biggest manufacturers.

http://www.macrumors.com/2015/01/28/apple-samsung-strategy-a...

I see the new smart watches as a new market. Health and fitness will convince many people to buy the new wearables.

Since Apple is always a premium brand, I wonder if Pebble or Android is going to be the new dominant wearable brand.

Agreed re: new market + health & fitness. It's worth remembering that our phones aren't really phones– they're really computers with "phone" as one of the apps on it. And there wasn't really a big market for it when it launched (outside of geekdom), until people started discovering how useful it was. Facebook, Twitter, etc are things that people can do on the subway with their pocket computers.

Similarly, I think if wrist computers take off, it'll be because of the health/fitness tracking stuff, rather than anything to do with the time.

You can look at Apple's SEC filings-- which are audited and come out quarterly-- which have the numbers for total iPhone sales on a regular basis. From this you can determine how many iPhones have been made.

There is no similar stat for Android. And there's a lot of nonsense (eg: PR firm made up numbers) spread around about android sales.

You can prove that a billion iPhones have been made-- at least if you consider an audited report filed with the SEC to be "proof". You can't prove that more than 100M android phones have ever been sold.

There are constant claims that android outsells the iPhone, but there's no evidence. And these claims always come from android advocates.

But of course, android outselling iPhone is taken as gospel by those same advocates.

I find the idea that writer thinks they have a chance competing with $17,000 Rolex watches laughable. Yest they may all be machine made, but they long heritage and are globally recognized as a high end watch.

Moreover Rolex are said to retain their resale-value pretty well.

A Rolex can live 30+ years, be re-sold or inherited many times, and still work like on the first day. Some of them even increase in value.

Resale value of the Apple watch? Well, after 2 years it's a slab of gold with obsolete electronics inside. After 4 years it's a slab of gold with obsolete electronics and a dead battery inside...

In just a few years your $10k watch will be worth as much as the material its made from, minus the cost to salvage it...

I think they will do an exchange program for the gold watches when the second version will be out.

Doesn't matter. A watch you get upgraded every year? It's not a watch - it's not a complete item any more. Rolex's retain their value, in part, because the complete item stays in service - thus the history of the device is maintained.

I'm still not sold on the idea of a 'smart watch'. And I'll admit I have a thing for mechanical watches, so if I'm going to spend hundreds (or thousands) of dollars on a watch, it's probably going to be a nice 'real' watch, rather than one of these things. And for a 'sports' watch, just a cheap velcro-strap casio/timex with a stopwatch function is all I need.

Until these watches integrate real 'phone' capabilities (so I don't have to also carry a bulky smartphone), I just don't see the point.

Great points that I agree with. For many people the ubiquitous phone has replaced the previous need for a watch. Now if someone wears a watch it is typically solely for fashion.

If like you said, a watch could stand on its own as a communication/fitbit device then it might take off. Perhaps Apple is simply out front here?

"A hundred-dollar gadget would have to sell to virtually every middle-class family in the country to yield meaningful revenues for Apple"

Since when does Apple only sell to one country? Last time I checked, the US accounts for less than 5% of the population of this planet

But the US accounts for a lot more than 5% of the people willing to buy their products. My guess would be closer to 30%.

Right now it's certainly closer to 30% than 5%, but I imagine a well made $100 Apple device would sell really well in India and China. I doubt it would be a good investment for Apple, but the problem isn't that there aren't enough people to sell to.

It's interesting that "luxury" gets invoked so often around this watch, compared to Rolex, etc. It's pretty clear they're going for the Veblen goods [0] category. No need to rationalize functionality, either.

[0] http://en.wikipedia.org/wiki/Veblen_good

Disagree with the author's claim that making a $17k watch would be bad for G Shock. It would do phenomenonally well in the hip hop community, promote the G Shock brand, anchor the other watches' price point, and be a great contest giveaway

You can count me as a big fan of Apple products. For me, the Macbook Air is about the perfect laptop. Apple networking devices have served me pretty well over the years. I've used an iPhone for years (since the 4) and see no reason to change. My iPad is easily my most-used computing device at home.

However, I have no desire to get an Apple Watch and I just don't see it being a huge market.

Now you have a lot of people who don't wear watches. Are they suddenly going to start? I'm skeptical.

For those that do the reasons tend to boil down to need, desire and habit.

"Desire" is the easiest category. Many people like fine (generally Swiss) watches. Some just for the perceived "status". Others because they're geeks for watch movements. I can't see them buying into any smartwatch.

Normal watches aren't wind-up. Wind-up watches are wound daily. Watches with batteries can last years on a single battery. Self-winding watches last basically "forever" (wear in the movement means servicing every 5 years or so).

Who really wants a watch that you need to separately charge every day?

Let's look at the applications. And here Apple has taken an unusual approach in what I tend to call shotgun marketing. They tout 9 or so use cases. Usually Apple tends to focus on 1-2 key use cases and even then they talk about them in terms of experience. Go back and look at old iPod ads to see what I mean. Obviously an iPod is a single use device (ignoring the Touch) but the same applies for iPhone/iPad advertising.

Fitness is one such category. It's unclear if their heart rate sensors are suitable for, say, running. Fitness HRMs are almost exclusively done with a chest strap. It's much more accurate and reliable although less convenient. There are other devices that don't use a strap (like the Basis watch) but, for this reason, they're not suitable for exercise.

But I guess the HRM functions make it fine for tracking your general activity during the day.

Which is why Apple touts "medical research".

The whole heart rate "sharing" and tapping someone's arm strikes me as gimmicky, even creepy, but who knows? Maybe there's a market for that.

The sort of person who doesn't want to take their phone out to make a phone call is the kind of person who has a Bluetooth headset.

Being able to glance at texts or emails? Maybe... but is it something people will pay $500+ for and charge every day?

Wrist watches came to exist because seeing the time on your wrist had a lot of uses and is pretty convenient. The smartwatch movement is attempting to co-opt that form factor but really what is the killer use case(s)?

Apple is a pretty conservative company and doesn't tend to get into markets without good reason, which is the only reason I'm watching to see what happens. Anyone else and I'd simply dismiss it.

Apple have had other products without widespread appeal like the Apple TV. Sure it's sold millions of units but not, say, the 70M/quarter kind of numbers the iPhone is up to (I believe it's probably <20M over the life of the device) but Apple hasn't put their full weight behind Apple TV like they seem to be with the watch.

I'll be shocked if this turns into a major product line (in terms of revenue) for Apple.

I think they're going to get killed on the luxury end. People buy Rolex and Hermes and Vuitton to get exquisitely made and differentiated items that act as status markers. The prices are out of all proportion to the utility of the items, and everyone knows the margins in those prices are enormous, but there is at least some story of manufacture and design behind that price.

Apple's "story" for a $17,000 watch is, that's how we priced it. It's an arbitrary decision without any plausible claim behind it. Any one buying one of these things is marked, not as a person of taste and means, but a sucker.

Apple, of course, claims industry-leading margins on its products because of its brand, and that brand is founded in part on design and appearance. But it's more of a "style" brand than "luxury" -- the items aren't expensive beyond the reach of most people. They can mark an owner's taste, but not, past a certain point, their means.

My fear is that Apple is allowing this luxury approach to taint its whole approach to the watch. Watches are definitely different than other technology, because they're constantly on display, and so many people insist the appearance of the watch fit their overall look. That does require a variety of looks and bands and such. But Apple has decided to position the watch as other watches are positioned -- either high-end luxury items, or more accessible but fashionable brands.

It's a missed opportunity to re-invent the branding and positioning of watches. What if Apple had instead recognized the need for options for the appearance for the watch, but had instead priced them simply on the basis of manufacture and development? The message could have been that next step for technology is to admit enough variety of appearance to blend in with a user's preferred look, without sacrificing the convenience and enablement and cost advantages of technology in the first place. "A watch for the rest of us" could have been a device that left the luxury people behind, stuck with a tradition that did less for them than that of the wider population.

Better still, such an approach could have been a big step against the idea of technology as commoditizing and homogenizing. It would have been an opportunity to look at technology, not as simply utilitarian, but a real opportunity for the expression of personality.

Apple would have been far better off, and far more revolutionary, to quietly say that marking status with contrived pricing for outmoded technology is just silly. Better to mark one's self with one's choices, within ranges available to many, and achieve status by the quality of those choices. They might have created a brand that in ten years made Rolex look ridiculous, and opened some really new approaches to thinking about how technology can interact with fashion.

> We want not be dominated by our technologies, but rather, to control them.

If that were true then nobody would choose Apple products, which always lack control-features that are offered elsewhere. It starts with their hardware and continues on throughout all of their software. Apple is the company of "one button" and "why would you want to do that?"

Their most basic mode of operation is to offer the bare essential amount of control to users. It's a great way to do business for them because it costs less to make things that have fewer options and if they perfect the few options that they do offer, then they can claim to be "better" than other products.

Apple products will force you to do things the "Apple way" and if you don't like it, then you're not going to have a good time. If you do like the Apple way, then perhaps you can fool yourself into believing that you actually have some control over your technology.

I guess you have never used a MacBook.

And I'm guessing the only reason you're guessing that is because you think Apple products are the greatest and you could never imagine anyone not liking their stuff?

No, I actually have a Macbook Pro sitting right next to me and we have iPads, iPods, iPhones, etc. throughout the house. I actually recommend them to users who don't care as much about control, which is most people. They're just not for me though.

You feel you don't have control of your MBP? You just need to do some research, it is more congigurable than you realize.

Which Macbook can I choose that has 2 physical trackpad buttons instead of just one multi-touch pad? I need it because multi-touch sucks for video games, but Apple only offers the one option. How about a laptop with a number pad? You don't get these choices because it's bad for Apple's bottom-line.

I'd also like to replace the OS X Dock with a Taskbar app, but all of the taskbar apps have the same bug because Apple doesn't let software developers modify the NSScreen.visibleFrame property (only the Dock can do that). So, windows always end up behind the taskbar. On Windows all of the APIs are there to replace the Taskbar with a Dock if I want to.

I'd also like to turn off the Macbook display when plugged into an external monitor.

And don't even get me started about how broken Spaces is, allowing you to cmd+tab to another space.

> I'd also like to turn off the Macbook display when plugged into an external monitor.

sudo nvram boot-args=niog=1

http://apple.stackexchange.com/questions/152203/turn-off-mac...

Right, but according to one commenter "This works once you boot. But only until the computer goes to sleep. Waking it back up turns the built-in display back on." and according to another one there is a three step process which must be implemented on every single boot.

So, wouldn't you agree when I say that Apple just doesn't give you the option?

If you're serious about gaming you shouldn't be using any kind of trackpad. You'll always be at a severe disadvantage. There are many portable usb mouse options available.

This is a "why would you want to do that" type of answer that Apple apologists often give to people when they ask for options that Apple simply does not offer.

Did you consider that I might be playing a single-player game and there's nobody to be at a "severe disadvantage" to? Maybe I want the trackpad to work with an OS that doesn't have multi-touch drivers...

There are plenty of valid reasons for which I personally prefer a physical right-click button on the trackpad that's built into my laptop.

> ...type of answer that Apple apologists often give to people when they ask for options that Apple simply does not offer.

How could Apple offer every option? You can ask for other options all you want, but thats probably a waste of your time and energy. The rational thing to do would be to just buy from a different brand.

It may surprise you to find out that no single company can possibly offer every possible configuration, option, and/or form factor possible. Luckily, different brands tend to cater to different niches.

> Did you consider that I might be playing a single-player game and there's nobody to be at a "severe disadvantage" to?

Interesting. Are there no enemies or objectives in your single player game? You're objectively better off with a normal mouse. Even a tiny portable usb mouse.

I am using one for a large portion of my waking hours, I agree with the OP. I would argue that your definition of control is more limited than theirs or mine.

I think the author is referring to control in a slightly different way. I know a lot of people who having switched to a Mac feel a lot more in control (my dad, for example). Previously they didn't have much of a clue what was going on, they were constantly bombarded with strange messages and alerts and now they have switched, most of that has gone away.

It's about feeling in control, not about having 1000 options.

I'd argue it's hand-holding presented as 'control', because that's what good hand-holding looks like; it's the opposite of clippy.

But as a practical matter, the Apple product is the one that's simple enough to use where the users feel in control. My mom used to fear her Windows PC. She controls her iPhone and iPad.

The other day, I tried to set up a computer as a Netflix machine in the guest bedroom. Ubuntu 14.10 on a pretty standard i5-4200 machine. Spent a couple of hours fighting to get audio output over HDMI--futzing with Pulse Audio, installing new drivers, etc. Gave up and installed Windows on the machine. I can't say the experience was an empowering one that made me feel in control.

by giving up hours, all of the precious times your phone is put away and you can fully participate and be present in the world around you, you can save seconds a day.

> “There are very few products that allow you to hand someone cash and be given back time. This will be the Apple Watch metric to track: time saved.”

Except all the other smart watches, including much better designed ones like the Moto 360, released in the past year and a half before Apple got into the market? Pray tell what is the Apple Watch's USP? The iPhone lock-in?

I don't own a smart watch, because honestly the only explanation for them existing is: "it is too much work to take my $500 smartphone out of my pocket." This article is clearly a puff piece, and even its only argument for the device is "time saved" (which I'm guessing refers to that 5-7 sec it takes to get your phone?).

Seriously someone please explain to me why you'd want this $350 brick or even a $250 360? That's half the cost of a smartphone again and only so it can relay events/info from your phone to your wrist?

PS - I loved Wired quoting TechCrunch. That's great "journalism" right there.

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