Tag: Apple Watch

How Can Android Wear Succeed?

I know I’m very late to the party, but I recently noticed this post via a comment on “The Overspill” newsletter by Charles Arthur.

“Until we have an Apple Watch of our own, no one is going to take Android Wear seriously (opinion)” link

Essentially, this article calls on Google to create their own Android Wear watch instead of leaving this to their partners.

If Google is serious about Android Wear, it should be serious about building Android Wear watches – full stop. Only Google has the long-term motivation to keep the platform alive, and only Google can afford for its hardware business to be a zero-sum game in the name of building up an ecosystem. Without our own “Apple Watch” to act as a guidepost, as proof that a better smartwatch can be made, Android Wear seems doomed to continue on in stagnation and obscurity.

Of course, the problem with this argument is that it does not align with how Android nor Windows became popular. Google did not have to build its own phone for Android to gain steam. Similarly, Microsoft did not have to make its own PC to make Windows popular. In both cases, the respective companies followed a strict OEM partnership strategy. Essentially, this argument suggests a lack of understanding on why Android and Windows became popular in the first place.

  1. Both Windows and Android gained popularity on the back of the success of the Macintosh and iPhone respectively.
  2. Both Windows and Android were low-end alternatives to the Macintosh and iPhone. They did not necessarily bring something new, and in fact they started out being downright inferior. They were however cheaper.
  3. Due to the success of the Macintosh and the iPhone, customers were already aware that a GUI and a touch-based smartphone were very good ideas and that they would be useful. Apple had already educated customers to the benefits, and had primed the market. All that Google and Microsoft had to do was to make the same benefits accessible to the rest of the market.

So applying this to the state of smartwatches, we can foresee the following scenario that would take us to the success of Android Wear.

  1. Apple will continue to work hard to educate customers on the benefits of a smartwatch. Apple will explore what features resonate, and what a smartwatch would actually be useful for (something that is still quite ambiguous).
  2. Once the Apple Watch starts selling something like 20-30 million units per year, then a) customers will be fully aware of the benefits of a smartwatch and b) Google will know what to make.
  3. Then all that Google needs to do next is to collaborate with their partners to develop such a smartwatch that is half the price of an Apple Watch, and to bring the benefits to Android users. Importantly, it is OK for this smart watch to be downright inferior. Since Android users are currently >80% of the smartphone market, there is a potential for Android Wear watches to exceed Apple Watch sales someday.

My point is, Google does not need to make its own smartwatch. Doing so would not move the needle one bit. Instead, what Google needs to do is to keep their OEMs cosy until Apple Watch goes mainstream, and make sure that their team can pounce then. The risk here is that Samsung is going their own way with Tizen OS, and will not be with Google when the moment arrives. Google has to make sure that Sony, LG and others will not follow suite, and this is indeed the only meaningful thing they can do.

The funny thing is even among the huge tech giants, it is only Apple that can predictably make a new category product go mainstream. All the rest can do is follow.

How Can Tizen Differentiate From Android Wear?

Although Apple has not released the sales figures for Apple Watch and neither has any of their competitors, it is widely assumed that Apple Watch is dominating the general purpose smartwatch segment (excluding dedicated fitness trackers).

At this point, Apple’s competitors, the Android Wear camp and Samsung Tizen have two choices. They can try to incorporate the good ideas of Apple Watch into their own designs, but at the same time keep themselves distinct in appearance in UI. The other choice is to not give a damn and make themselves as similar to Apple Watch as possible, essentially copying the design.

Samsung has essentially proven with their smartphones, that the latter choice works tremendously well, and if you have the money to wage a long legal war, you can essentially escape serious punishment.

Samsung has just shown off a teaser for their new Samsung Gear S2 smartwatch based on Tizen, and to no one’s surprise, they have chosen to copy Apple.

NewImage

The great thing about Tizen is that Samsung is not held back in any way by Google, and it is completely free to copy Apple any way they wish. Google is much more likely to shy away from this approach and try to use their own Material Design, regardless of which approach results in more sales.

So here, Samsung has clearly found a way to differentiate Tizen from the Android Wear camp. Tizen will copy Apple Watch while Android Wear OEMs will use Material Design. I’m pretty sure that Samsung’s approach is going to work better.

Android Wear OEMs Are Copying Apple Watch And That Is A Sound Strategy

When you consider that Android Wear reportedly only sold 720,000 watches in 2014 and Apple Watch had a million pre-orders on the first day, it is plainly obvious that the best strategy for Android Wear is to copy Apple Wear. Unless you have a very good reason to believe in your own original strategy and your ability to implement it, it is always better to go with the flow.

Therefore the report that the Asus ZenWatch 2 is copying Apple Watch in both design and marketing material is totally expected and makes complete sense. In fact what is more disturbing is this interview with Google’s product manager of Android Wear, Jeff Chang. Chang stubbornly reiterates Google’s almost ideological emphasis on openness and flexibility, and also on the always-on display. This is fine if Moore’s law allows Google to make the smartwatches that they want in say a year’s time, and maybe Chang has knowledge of future products that can achieve his goals. If not, Google should also be copying Apple Watch.

Incidentally, I’m very sure that ASUS should be putting a bit more effort with the back case. That is not how the back cases of watches should look.

What Apps Might Work On The Apple Watch

Just a few quick thoughts on what kind of apps would work and what wouldn’t work on an Apple Watch. This should also apply to Tizen and Android Wear.

  1. The scrolling experience is very bad on the very small screen. Apps that display a lot of data and require you to quickly scroll through are not going to work. This includes any application that has a low signal vs. noise ratio. Many social networks including Twitter, and also news applications have a low signal vs. noise ratio, and I think it is unlikely that they will work.
  2. Apps that increase the signal vs. noise ratio through opt-in, location and time can be quite convenient. The information should have a certain immediacy to it. A weather app that, instead of giving you an overview of the weather, simply tells you when a rainstorm is approaching is a good example. It uses your location, the current time, and information from the cloud to increase the signal vs. noise ratio. It also demands immediate attention so the taptic engine on the wrist is the best way to get notifications for this. Public transport apps are also an obvious target.
  3. Sports news is another genre which you give opt-in information about which team you follow. Although there isn’t really an essential immediacy to it, fans like to know what has happened, as it happens.
  4. I suspect that a new, more local (like 50m radius) kind of Groupon scheme would work. The shops that you frequently visit could do some time-limited offers (like 30-mins) and you would get notifications as you walk by. The time limit creates an artificial sense of immediacy which is good for sales and makes good use of the watch.

From a sales and marketing perspective, I expect brick & mortar stores to exploit the scheme that I showed in item #4.

A good argument can be made that Google Now can offer the same things and in an even better way. That is something that needs further study.

The interesting thing is that the Internet originally freed you from time constraints. Both the WWW and email allowed you to visit e-shops and to communicate with your friends in an asynchronous way, and you were 100% free to do it at your convenience. I sense that the Apple Watch will reverse this trend. It will pull us back to synchronising with what is happening immediately around us and tempt us to act immediately. I think the implications are going to be quite big.

Short Impressions Of the Apple Watch

I received my Apple Watch at night on April 24th, and I’ve been using it for a few days now.

Instead of going into the features side of things and discussing common issues like battery life, I would like to go into the behavioural side of things. That is, how my behaviour changed due to having a window to my iPhone always on my wrist.

  1. Always being able to quickly check the time is really, really nice: I actually noticed this half a year before I got my Apple Watch when I resumed my decades long habit of wearing a watch (a mechanical Swiss watch). I had stopped wearing a watch when I started to pick up our new-born baby. Now with the Apple Watch, I have a strong incentive to keep my watch on at all time, whereas with the Swiss one, I took it off when I got back home. This makes it just more convinient.
  2. Taking phone calls on your wrist is simply natural: When you are wearing your Apple Watch, incoming phone calls will show up on your watch. You will immediately see who it is from, and whether you want to immediately respond, or you want to call back later. If you do want to respond, instead of frantically pulling your phone out of your pocket, you can simply respond on your watch. This is much more natural and leisurely. If you decide that you want a bit of privacy, then you can take your phone out of your pocket at your own pace, while still on the line, and then use handoff from the iPhone lock-screen to transfer the call to your iPhone. I am convinced that anybody who takes several calls a day on their iPhone will appreciate not having to rush to pull it out from their pocket or bag.
  3. Dictating your messages becomes your preferred way of texting: On the Apple Watch, you simply have no choice unless the prepared messages or emoji are suitable enough. Once you do it however, you realise how good the voice recognition is. The result is not 100%, but it’s easily comprehensible to the recipient. If it is an internal message, it should be just fine. Then you realise that you could use dictation on your iPhone as well, and you start doing this more often. It’s much faster than typing.
  4. Clock faces are not just appearance. You change them depending on the task at hand: With the Apple Watch, the complications on the clock face are also the most convenient shortcuts to apps on the phone. For example, tapping the calendar complication takes you to the calendar app. Tapping the temperature complication takes you to the weather app. If you don’t have these complications, accessing these apps requires flipping through your glances (you are likely to have many), or going to the app list screen, scrolling to find your app, and carefully tapping the right one. Since you can only put 5 complications on a single clock face at maximum, it then makes sense to use different clock faces depending on what you are doing. For example, if you are cooking, you could use a clock face that has the timer complication. If you are at the office with a lot of meetings, you could use a clock face that can accommodate the text of the next meeting (Utility or Modular). At night, when you have no further appointments, you could switch to the Simple clock face and get rid of all other distractions. The Simple clock face, when pared down to the bare minimum, is also nice because it doesn’t light up your surroundings when it accidentally lights up in the dark when you are say in bed or in a theatre.
  5. You stop browsing Twitter: I think this is huge. With my iPhone, I would simply pick it up when I was bored and if I didn’t have any notifications, I would still quickly browse Twitter to see if anybody had said something interesting. However with the Apple Watch, you realise that you don’t really have an excuse to stare at your phone and you therefore lose the chance to go to Twitter. And as for the Apple Watch, it really is not suited for quickly scrolling through long lists. I sense that Apple Watch will teach us to prioritise what is important from what we just do to kill the time, and as a result, we will kill the time less and less. This has implications for the services that have a low S/N ration and I expect it will force Twitter to provide us with better tools to filter our noise from our Timeline.
  6. You stop worrying about missing calls: I missed calls all the time. A buzz in your trousers isn’t really that noticeable when you are walking for example. Women who keep their phones in their bags, I’m sure, miss calls all the time. The Apple Watch changes all this. You won’t miss calls or important notifications. You no longer have to worry about this. This is super important to the people who care about these things, and I think there are quite a few of us.
  7. You can now keep your phone in silent mode: Because you can feel your notifications at a tap on your wrist, there is no more excuse for you to attract unwanted attention to yourself with funny sounds when you receive a phone call. You can keep your phone in silent mode and receive notifications discretely. This is great for women who keep their phones in their bags, and who have to keep their phone call tones on. Of course, you would also want to keep your watch silent too.
  8. You will learn to tap slightly below your target: iOS devices have always registered taps slightly above the point where your finger makes contact with the screen. This is intentional, and I think it is a result of actually testing how users touch what they think they are touching. I think Android does this too, although some early devices missed this. Now with the Apple Watch, the touch targets are much smaller and your taps have to be much more precise. I found myself intentionally tapping a bit below the targets because my habit on my iPhone had been to tap a bit to high (so that the actual point of contact hit the target), and I found that my taps weren’t registering on the Apple Watch. This is something that I suspect quite a few people will have to adjust to. After the adjustment however, hitting even the very small buttons becomes very accurate. It also trained me to hit my iPhone buttons better.

Update

Added items 7-8 on the list.

Apple Watch: Mostly Used As A Watch

Even if you have a phone in your pocket, it’s really convenient to have the time on your wrist. And if you do, you’ll use it all the time.

This is something that I had suspected ever since I started wearing a wristwatch again after a 7-year hiatus (ever since my first child was born and I had to carry her all the time).

Well, I thought, that might be just because I spend all my youth wearing a watch all the time. It turns out, people who say “I’ve never been a watch person” also find that it’s a good idea to be able to tell the time.

Here’s Steve Kovach from Business Insider.

But I mostly use it as a watch.

Getting notifications on my wrist is great, but I find that I mostly use the Apple Watch like I’d use a normal watch: To check the time and date. Everything else it can do is just gravy.

Of course I don’t have nearly enough data to prove that a significant proportion of people will feel the same. I do think however, that there are signs that simply being a great watch is actually one good reason for people to buy an Apple Watch.

How Popular Will Smartwatches Be?

A while ago, I tweeted why I felt the tech pundits that suggest that you don’t need a smartwatch when you’ve already got a smartphone, are totally wrong.

Naofumi Kagami 加々美直史さんはTwitterを使っています eric analytics BenBajarin One difficulty in analysis is tech community biased towards people who can pull out phones during work

view on Twitter

The point is that whereas many people who write or comment about tech have a job where it is acceptable to pull out their smartwatches quite frequently, a large proportion of the population spend their work time directly in front of customers and are therefore unable to do so.

For example, think about waiters and waitresses at a restaurant. How would you feel if they were staring at their phones and if they didn’t notice that you were trying to get their attention? Or how would you feel if you were riding on the subway and the driver, who is responsible for your safety, was peeking in his smartphone?

There are plenty of jobs where glancing at a watch is acceptable, but staring into your smartphone isn’t.

You could easily add other jobs where a smartwatch will quickly become a necessity and not just a convenience. For example, doctors working inside hospitals have to respond quickly if one of their patient’s condition suddenly deteriorates. They carry phones with them at all times, but it’s vital that they don’t miss a call. Rather then having a vibration in your pants which can sometimes be hard to notice, it’s much better to have a tap on your wrist.

Similarly, sales reps will also do much better if they quickly respond to emails or phone calls from customers, and so missing calls is not an option. For this very reason, many Japanese employees keep their phones in their shirt pocket and not in their trousers, because it’s much easier to notice a vibration on your chest. This will no longer be an issue if you are wearing a smartwatch.

Also lacking from the discussion is women who often carry their smartphones in their bags and not in their pockets. They don’t want to miss calls or important notifications either.

The list goes on and on. In fact, you get to the point where you really start to wonder why smartwatches didn’t take off earlier, before Apple announced that it was entering the market.

The way I see it, there has always been a very strong need for glanceable notification devices that could be worn, especially for professionals, despite the lack of interest from the tech community. The true mystery is why none of the non-Apple products could deliver on that need. Somewhere, there was a block. Maybe it was the inability to quickly respond to that notification without pulling out your smartphone. Maybe it was because such devices didn’t match a suit from a design standpoint.

Whatever the reason, it seems likely that the Apple Watch has overcome the block and now we will see a flood of people recognising the benefits of notifications coming to your wrist. This is why I am optimistic about Apple Watch sales, and sales of smartwatch sales in general. I would be very surprised if Android Wear did not start to sell briskly, although it may take a product iteration or two.

How Will The Apple Watch Affect Tech

Here is a list of some of the things that might happen if the Apple Watch and similar Android-compatible wearable devices start seeing strong sales.

  1. Some early reviewers are saying that their usage of their iPhone decreased when they started to use the Apple Watch. If this indeed is how Apple Watch users will behave, this will huge implications for digital marketing. Marketers will have to think of ways to appeal to consumers on their watches, which will have very different characteristics from smartphones.
  2. Not only does the Apple Watch not have a web browser, it also seems to lack any HTML rendering. Emails are rendered as text, which means that any emails that only include the HTML component are not going to show any content. This suggests that text and good copywriting is going to increase in importance whilst visuals are going to be less important. Another possibility is that we will see a lot of emoji even in the promotional material send by corporations. This is actually the preferred way that Japanese companies send email messages to their mobile subscribers so we have precedence here.
  3. This could reverse the strong and accelerating trend towards graphical and video content that we see on social networks. We might revert to simple text messages (with emoji). This really is like going back to the Japanese i-mode days.
  4. The Twitter client sucks if you are following a lot of people and you have them organised in lists. In fact, since scrolling through large lists is not as comfortable or as brisk as on a smartphone, it would be particularly unwieldy if you have a lot of follows. Twitter has a serious problem on their hands and they might bring back lists to the centre stage, or they might start heavily curating your timeline.
  5. This also has implications on how shopping sites might be structured. Shopping sites can no longer use large lists of merchandise to show their goods. I am not confident that current recommendation algorithms are good enough at filtering content for use on watches. Interestingly, the Apple Watch is not a plus for e-commerce retailers but could be a huge boon for brick-and-mortar stores which can use iBeacon-based location data to send customers exactly the right message at exactly the right time.
  6. Basically, you can’t scan through a lot of content like you can on a phone. The content has to be pre-filtered or curated.
  7. The Apple Watch, because it does not have a web browser, is absolutely Google-free. It’s surreal to say this after a decade of Internet domination by Google, but it’s true.
  8. Being browser-free is going to change the way content and merchandise is discovered. Since you can no longer use SEO tactics, you will have to resort to having your message proposed through a native advertisement or a social endorsement (a retweet or a like). That is, unless you have a brand or a cause so strong that people will have installed your app.

I foresee a lot of changes coming. Some are even quite disruptive to the current Internet juggernaughts.

Of course, this totally depends on the Apple Watch being a huge success, and on customers preferring to use the watch more than their smartphones if there is the option to do so. Whether this will be the case is still an open question, but I would like to end with the thought that if you have an Apple Watch, you are more likely to keep your iPhone in your bag or on the table, instead of your pocket. Having the Apple Watch on you at all times will definitely distance you from your iPhone.

Apple is Bringing Luxury to the Masses

By selling the 17,000 USD Apple Watch Edition, it would seem as if Apple is trying to become a luxury brand. Here I would like to discuss how I think this argument does not capture what Apple is really becoming. I don’t think Apple is trying to be a luxury brand at all. Instead I view this as Apple becoming a new kind of brand. A brand that brings luxury to the masses.

A luxury brand can only sell to a small portion of the total market. However, by becoming a luxury for the masses company, Apple is aiming to take both profits and volume from the markets that it targets. This is much like how the iPhone captured 10-20% of the global smartphone market (which made it the first or second largest vendor), with close to 90% of the profit share.

What do we mean by luxury?

“Luxury” has been an issue in the commentary surrounding Apple for quite a while. It used to be directed towards the reason why people buy iPhones as opposed to premium Android phones. With the Apple Watch, because of the gold Edition, this argument has become even more commonplace.

The problem is, nobody really seems to know what “luxury” means, and the people who do seem to use it somewhat differently. As Horace Dediu mentioned in a recent podcast, maybe it is time to stop using the term “luxury” and to come up with something new. This does however seem rather extreme given that other industries have been happy with this for decades.

I am not in any way an expert in neither luxuries nor fashions and hence I have no informed opinions on how these terms should be used. I do think that the distinction is important for understanding Apple Watch.

Price

Luxury is very often associated with price. Simply, cheap products are rarely luxuries and luxuries are usually pricy.

Looking at the prices of Apple Watch, the Apple Watch Edition satisfies the criteria for a luxury watch. It is priced from 10,000 USD to $17,000, with the emphasis on the 15,000-17,000 USD versions (10,000 USD is for the sport band which is rather unusual for a luxury watch).

However, the aluminium and stainless steel versions, which start at 349 USD and go up to 1099 USD are not exactly luxury. They compare in price to 200-400 USD watches from DIESEL (which calls themselves a “premium casual brand”), mechanical watches from FOSSIL. They are also at the low end of premium watches by brands like SEIKO and CITIZEN and at the high end of fashion watches from CASIO. It’s impossible to classify the aluminium and stainless steel Apple Watches as luxury.

Taking a completely different view, they tech view, you also find that it is squarely in the range of the iPad mini to iPad Air. The Apple Watch aluminium and stainless steel versions are actually at the lower end of Apple’s whole product line.

So although the gold Apple Watch Edition is certainly priced as a luxury product, the other versions are not. The other versions are simply premiums as are any other products in Apple’s product line.

Is Apple Watch luxury?

Since I don’t really understand luxury, I’ll defer explanation of the term to articles on the web. For example, here is an article by James D. Roumeliotis.

There is a classic litmus test:

  1. Is the product manufactured in artificially limited quantities? (i.e. the rarity factor)
  2. Does the firm have a story to tell? (i.e. history & pedigree)
  3. Is the firm portraying a unique lifestyle?
  4. Is craftsmanship the hallmark, which delivers products that only High Net Worth individuals (HNWI/UHNWI) can purchase without question?
  5. Does the brand offer authenticity?

In the video for the Apple Watch Edition, Jony Ive briefly mentions limited quantities so it would seem criteria 1. is satisfied.

Criteria 2. is satisfied by the very nice videos, which are available for all versions including the cheapest aluminium Sport model.

Criteria 3. is not met for any of the versions.

Criteria 4. is problematic. Jony Ive describes the highest level of craftsmanship (or care), but most of this is automated. This craftsmanship is mass-produced by precision machinery and is available for all versions. It is at the highest level, but is not exclusive for the rich.

Criteria 5. is something that is something that I don’t understand. I won’t comment on this.

What you see is that all versions, even including the aluminium Apple Watch Sport, satisfy a number of the criteria for luxury. In fact, the only criteria that the gold Edition uniquely satisfies is that regarding limited quantities.

Luxury for the masses

Apple Watch is actually a “luxury for the masses”. By automating and mass producing what previously required a high level of craftsmanship, Apple has brought luxury products within reach of the masses.

Importantly, this is not unique to the Apple Watch. Nor is it something that is recent. Almost all Apple products have been produced with the same amount of care and precision machining for quite a while now. What Apple is saying is that the attention and care to detail they have been exercising for years on products ranging from the iPad, iPhone, MacBook, iMac to the PowerMac, has always been worthy of luxury status.

The Apple Watch Edition is not a special product. It is just like every other Apple product.

A note on fashion

An aspect that was not previously an topic for Apple, but is now a topic for the Apple Watch, is fashion. In the article I linked to above,

However the nature of fashion is ephemeral and change. Pick up a copy of September Vogue and judge for yourself.

Although there are some fashion brands that are very pricey, price itself is not a criteria for fashion. Fashion is more about change.

This is why we have fashionable Swatch watches from under 100 USD. It is perfectly OK to be cheap but fashionable.

It is very possible that the Apple Watch would be fashionable. The prices certainly do not preclude it. Also like Swatch, there are a wide variety of bands and clock faces to choose from which allow the wearer to express their individuality. Brand power is also likely to be a key in fashion, and the Apple brand is certainly one of the favourites among e fashion conscious people.

What I find interesting about fashion is its dynamics of change. Fashion can change very quickly in the span of a year or two. It can also be rapidly obsoleted. Therefore, if there is a strong fashion aspect to the Apple Watch, we have to accept the possibility of a very, very rapid uptake, which could even be faster than the previous tech adoption champion; the iPad.

We should look out for how often the Apple Watch appears in magazines and news dedicated to the fashion conscious. If it is significant, then we might see an extremely quick ramp in adoption, an adoption rate that is characteristic of fashion.

Why does this matter?

The distinction between what it means to be a luxury, premium or fashion is important because it defines the addressable market. A luxury product in the pure sense must have exclusivity, and hence the market is limited. That is why Swiss watches only capture 3% of the total watch market in unit sales. This compares to iPhone having over 10% market share of global smartphone shipments and having about half the smartphone market in the US and Japan. Add to the fact that most people nowadays don’t even wear watches, and you have to conclude that the luxury watch market is pretty small from Apple’s perspective.

It’s not that Apple seeks to maximise profits. It’s that Apple seeks to make meaningful contributions. And you can’t really change the world by just targeting the luxury segment.

Luxury for the masses

I believe that Apple is aiming to bring luxury to the masses, and has actually been so for quite a while. If fact Apple has from its very beginning, always been a “for the masses” company.

With the Apple II, Apple brought personal computing from the hands of hardware enthusiasts towards software enthusiasts. With the Mac, Apple made personal computing easy enough for everybody to use. With the iPhone, Apple brought personal computing away from office environments and into more personal settings. Apple has always been about expanding the number of people who can use their products, and increasing use-cases.

Apple is misunderstood because in bringing their products to the masses, they do not rely on cheap prices. People think Apple targets only the premium and luxury segments of markets, while forgetting that these markets would often not have existed without Apple in the first place.

Categorising Apple as a luxury or even premium company does not capture the essence of what Apple strives to do. We must understand Apple as a “for the masses” company. What is new with the Apple Watch is simply that this time, Apple has explicitly brought luxury to the masses.

Apple Is Not Focusing On Luxury

The pricing of the gold Apple Watch Edition tells us that Apple is not focusing on luxury. Instead, they are focusing on fashion.

First read Benedict Evan’s great post on why Apple is making a gold watch.

Apple retail is a self-funding marketing operation. So too, perhaps, is the gold watch. Apple might only sell a few tens of thousands, but what impression does it create around the $1,000 watch, or the $350 watch? After all, the luxury goods market is full of companies whose most visible products are extremely expensive, but whose revenue really comes from makeup, perfume and accessories. You sell the $50k (or more) couture dress (which may be worn once), but you also sell a lot of lipsticks with the brand halo (and if you think Apple’s margins are high, have a look at the gross margins on perfume). 

His argument is that Apple created a gold watch for marketing purposes. They aren’t really serious about selling you a gold watch, and they don’t care if they don’t. They care that it’s on the cover of Vogue magazine and lots of people talk about it.

This would have been different if Apple had made the price of the gold Edition something like 5,000 USD. Then there would be normal people buying it and the volumes would be pretty high. High enough to make a significant contribution to total sales of the Apple Watch.

Horace Dediu for example was predicting something like 5,000 USD. That probably would have been the correct price if Apple was trying to optimise for revenue and profits. John Gruber predicted 10,000 USD which was still very far off from the actual 17,000 USD. In his case, he was simply pricing based on competitors; competitors whose gold watch prices aren’t optimised for revenue generation either.

The aluminium and stainless steel versions are very affordable

So now that we’ve got the gold Edition out of the way, we can turn our attention to the aluminium and stainless steel versions at $349 USD and $549 (for the non-sports band Watch). These are very affordable, especially for a high-build quality tech product. They are iPad prices. Although they are only a bit more expensive then Swatches or Casio G-Shocks, they are in the same range as Fossil watches.

And anyone suggesting that these are luxuries or jewels is simply confused. They have been blinded by the gold Edition, which is probably exactly what Apple intended. Fashion is a much better way to describe them.

One important thing to note is that if you wear a Swatch on casual occasions, then in many cases, you will also wear a separate watch for more formal ones. However with the Apple Watch, you are expected to wear the same watch at all times, switching bands to suite the occasions. Since the bands for Apple Watch are also quite affordable, this is easily within the reach of normal fashion enthusiasts.

Apple is not focusing on luxury

It should be very clear by now that Apple is not focusing on luxury. If they were, then they should at least have 5,000 USD luxury models that they can sell at meaningful volumes. Instead, the only models that Apple is serious about selling in volume are much cheaper. They are priced not at luxury prices, but fashion prices.

What does it mean for Apple to focus on fashion?

Apple in many ways has always been somewhat fashion minded. They have always made computers that look very nice, and with the iMac G3 lineup, they had a variety of colourful bodies to choose from. Even the current iPhone lineup has three colours to choose from.

Apple has also attracted the attention of a large number of case manufacturers, many of which who provide very fashionable designs. There is an abundance of fashion surrounding Apple’s offerings.

Apple has always been focused on fashion. Nothing has changed.