Why Apple Can Price Its Gold Watch At $1200
When Apple, Inc. ( AAPL) unveiled its much-awaited smartwatch earlier this week, it deliberately left out the pricing details for its Apple Watch Edition, which features a sophisticated gold finish designed specially by Apple's metallurgists to create a premium feel.
While it is known that the entry-level Apple Watch Sport will retail for $349 in the US, there is still much confusion surrounding the actual material being used in the body of the flagship gold smartwatch.
At the spectacular launch event on September 9, Apple did not reveal whether the top-of-the-line version of its smartwatch would be gold-plated or made of solid gold. The only detail CEO Tim Cook and his executives provided was that there was indeed an 18-karat gold version of the watch.
Speculation surrounding the material used in manufacturing the gold version of the Apple Watch are causing quite a stir in the watch industry. TechCrunch started off the rumors yesterday, saying that the people familiar with such alloys used in timepieces have noted that if Apple was in fact using solid 18-karat gold to construct the Watch Edition, the material and build could alone cost as much as $600 to make.
When the inside components, display screen, and Apple's notoriously high margins are added to that, the gold smartwatch could be priced well over $1,000, perhaps even touching the $1,200 mark.
It's clear that such a price is aimed primarily at highly affluent buyers, most of whom probably own several other Apple products. But the move is also a clear jab at similarly-priced traditional luxury watches like those made by Movado Group, Inc. ( MOV) and The Swatch Group Ltd.'s ( UHR) premium Omega brand.
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