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I think this angle might be overstated. Are heirloom purchases really what drives the $60 billion luxury watch industry? Or it it people like my boss and his bo

by Steko 12y ago

I think this angle might be overstated. Are heirloom purchases really what drives the $60 billion luxury watch industry? Or it it people like my boss and his boss -- "watch guys" who buy at least one high end watch a year? Or the very rich? Does Apple really need to target all the same people the current luxury market does? Or can the product be successful by targeting the many people who don't even wear watches? When the iPhone debuted many people focused on the features it lacked compared to the competition but by and large it sold to people who had never used smartphones and didn't think of those features as dealbreakers. Yes people were going there (to smartphones) eventually anyway but we might say the same thing about wearables/watches. Instead of saying "hey the Apple watch doesn't do these things just like other watches" what we should be saying is, that's obvious to anyone including Apple, why did they make that decision? Perhaps the current watch companies are the ones that have failed by fighting over a market that's 1% of what it could be and then puffing their chest up like RIM before the storm.

bradleyland 12y ago
It's definitely one of the more salient counterpoints, but I think it's more the kind of thing that will limit the market size, rather than kill it altogether. The observation that Rolex sells $20,000 watches with the same internals as a $6,000 watch is where you'll find the counterpoint to the problem of obsolescence. Yes, the Apple Edition watch will likely suffer from the same obsolescence issues as iPhones, but as others have pointed out, that will only matter for certain types of buyers. The market for $20,000 watches is pretty small, and it's composed of different types of buyers. The smallest of the market is the group who can fork over $20,000 annually for a fashion accessory, rather than buying something as a milestone that will become an heirloom. However, Apple can absolutely afford to build a very small number of Edition watches when selling at this price point, because the cost of materials is so low, and they'll sell tons of them at lower price points, which gives them the scale they need to justify production. This is where the correlation to the ubiquity of Rolex movements come in. Apple is using the same strategy. They have one "movement" (a computer in this case), which they're packaging to suit a very broad set of price points. I think Apple will succeed in this endeavor because they have the brand. Rolex is, again, a very good comparison. In really uppity horology[1] circles Rolex watches are considered pedestrian because they are mass-produced, and they don't include a lot of hand finishing like the more prestigious brands. That doesn't appear to matter to the broad market though, because Rolex enjoys two logic-defying distinctions: 1) they sell many more watches than any of their upper-crusty close-kin, and 2) their watches hold their value in a way that defies their mass-production status. Sound familiar? Apple products are often lampooned for selling at a price-premium when compared to similarly specified commodity alternatives, and Apple devices fetch strong pricing on the secondary market. IMO, Apple & Rolex are as close as we've seen to companies who have deconstructed and are in the process of perfecting the formula required to bring to market products that uphold these attributes. If Apple can do this successfully with watches, they will have upped the ante significantly by jumping from one vertical to another; a feat for which I cannot think of another example. 1: Technically, the science of timekeeping, but often used to refer to the community of people interested in timekeeping devices (watches).

by Steko 12y ago

bradleyland 12y ago

It's definitely one of the more salient counterpoints, but I think it's more the kind of thing that will limit the market size, rather than kill it altogether. The observation that Rolex sells $20,000 watches with the same internals as a $6,000 watch is where you'll find the counterpoint to the problem of obsolescence. Yes, the Apple Edition watch will likely suffer from the same obsolescence issues as iPhones, but as others have pointed out, that will only matter for certain types of buyers. The market for $20,000 watches is pretty small, and it's composed of different types of buyers. The smallest of the market is the group who can fork over $20,000 annually for a fashion accessory, rather than buying something as a milestone that will become an heirloom. However, Apple can absolutely afford to build a very small number of Edition watches when selling at this price point, because the cost of materials is so low, and they'll sell tons of them at lower price points, which gives them the scale they need to justify production. This is where the correlation to the ubiquity of Rolex movements come in. Apple is using the same strategy. They have one "movement" (a computer in this case), which they're packaging to suit a very broad set of price points. I think Apple will succeed in this endeavor because they have the brand. Rolex is, again, a very good comparison. In really uppity horology[1] circles Rolex watches are considered pedestrian because they are mass-produced, and they don't include a lot of hand finishing like the more prestigious brands. That doesn't appear to matter to the broad market though, because Rolex enjoys two logic-defying distinctions: 1) they sell many more watches than any of their upper-crusty close-kin, and 2) their watches hold their value in a way that defies their mass-production status. Sound familiar? Apple products are often lampooned for selling at a price-premium when compared to similarly specified commodity alternatives, and Apple devices fetch strong pricing on the secondary market. IMO, Apple & Rolex are as close as we've seen to companies who have deconstructed and are in the process of perfecting the formula required to bring to market products that uphold these attributes. If Apple can do this successfully with watches, they will have upped the ante significantly by jumping from one vertical to another; a feat for which I cannot think of another example. 1: Technically, the science of timekeeping, but often used to refer to the community of people interested in timekeeping devices (watches).