Makes me wonder too. I have a hard time believing one person (other than Tim Cook) could make a decision like this.
I don't even see Tim Cook or Steve Jobs being able to make that sort of decision without some evidence to back up the possibility of a market success. Sure, any new product is a gamble, but if every piece of evidence pointed to no interest in a solid gold (casing) version at the necessary price points I don't think it would be happening.
That is not to say it won't be a mistake. We saw the original 4GB iPhone capacity and pricing to be a mistake, but that was correctable. If no one buys ?Watch Edition they can just stop producing them. I doubt it will hurt Apple or ?Watch in the long run… but I suspect it will be popular; not by me as I'm not a fan of gold, but by enough people that I will be shocked by the ASP, if they ever break it out (which I think they will because it will be impressive).
In my opinion Apple has to address the obsolescence question with this product. I don't doubt the quality of this watch for one second. I'm sure it is second to none. I remember after the event some hands on reviews raving about the quality of the watch bands. That's all great but unless there is some sort of upgrade path who's going to want to shell out thousands of dollars when in 2 years snother one comes out with more sensors, maybe GPS, etc. Are gen 1 owners out of luck? Or are they able to swap out the watch and keep their bands? Or trade in their watch for a new one?
My point exactly. Gen 1 ?Watch case stays the same forever, electronics are upgraded over time for a fee.
Apple might release new models alongside the first one over time. E.g. MacBook Pro, MacBook Air.
It could be something like this: upgrade the battery for $99, upgrade battery + electronics for $199 (or more).
On the other hand, maybe Apple will require upgrading the electronics along with the battery.
No decision for techno-moron end-users to make, and it would keep all end-users within 2 years of "current."
That would make it easier for developers, since they'd only have to support ?Watches up to 2 years old.
Keeping the case the same size ad nauseam will help to maintain resale value (eBay) of older ?Watches.
I imagine Apple could start a trade-in program for ?Watch, like they do for iPhone / Mac etc.
And, of course, there will probably be a special AppleCare plan for the ?Watch.
For rich people $10k is nothing. These are the same people that buy $120k cars that are worth half of that after 4 years.
I'm pretty sure you could 'recycle' a gold Watch for a ton of money.
The unknown has never whether "rich people" can afford it, its whether "rich people" will look at ?Watch as jewelry or as CE. The latter being something that "rich people" often tend to not invest well. I literally know people that would have a multiple cars that cost well over $100k each that they would drive sparingly, but then pay hardly anything on a WinPC that they frustratingly used for a good part of their waking day. That is the challenge for ?Watch which is why I hope they have built-in some sort of upgrade process so that the particular ?Watch styling of a particular year can still be useful as CE many years down the road.
Rolex hasn't changed the thickness of their Submariner or Oyster Datejust or Day-Date. Ever.
They don't feel the need to compete against, say, Patek Philippe in "thin."
So why should Apple make their first ?Watch series thinner over time?
Better to release all-new thin models later in addition to the thick ones.
Think ?Watch Air.
Rolex, and others are mechanical watches. Their moving parts have been shrunk down as far as humanly possible.
I get that. But the $349 price has already been announced so for this event (assuming Apple has one) I can damn well guarantee you the media will focus on one thing: the price of the Edition watch. Every tech, news, financial, pop culture site will focus on the $10K edition watch as if the $349 aluminum one didn't exist.
The Gold Watch is not the do or die product. Its more like a special edition model. Even aggressive estimates only show about 10% of the intial order is Gold watches.
I don't Apple nor anyone with a half a brain think the Gold watch will sell the most units.
Again it's not about the sales of the gold watch. It's about perception. The perception that Apple is turning into Vertu.
I get that. But the $349 price has already been announced so for this event (assuming Apple has one) I can damn well guarantee you the media will focus on one thing: the price of the Edition watch. Every tech, news, financial, pop culture site will focus on the $10K edition watch as if the $349 aluminum one didn't exist.
Let them. Who cares.
The Gold Watch is not the do or die product. Its more like a special edition model. Even aggressive estimates only show about 10% of the intial order is Gold watches.
I don't Apple nor anyone with a half a brain think the Gold watch will sell the most units.
What I expect to see are these so-called professional talking about you get the same functionality from the $349 ?Watch Sport as you do from the $10,000(?) ?Watch Edition, without very few (if any) noting that you can spend $5 on a watch and get the same functionality as a watch that costs hundreds of thousands of dollars (or more).
What I expect to see are these so-called professional talking about you get the same functionality from the $349 ?Watch Sport as you do from the $10,000(?) ?Watch Edition, without very few (if any) noting that you can spend $5 on a watch and get the same functionality as a watch that costs hundreds of thousands of dollars (or more).
An but the $10K watch is something you keep forever and is handed down several generations blah blah blah. I hope Apple's marketing team is up for the challenge. I'd love it if Apple did something that surprised everyone to where the price of the Edition watch was overshadowed. I'm not sure what that could be though.
An but the $10K watch is something you keep forever and is handed down several generations blah blah blah.
If it's still seen as CE and not as "ornament" then I'm not sure that will happen.
I hope Apple's marketing team is up for the challenge. I'd love it if Apple did something that surprised everyone to where the price of the Edition watch was overshadowed. I'm not sure what that could be though.
I'm hoping they are, hence my comments about the SIP being upgradable and Apple having designed a longterm evolution into components that make up ?Watch.
If it's still seen as CE and not as "ornament" then I'm not sure that will happen.
I'm hoping they are, hence my comments about the SIP being upgradable and Apple having designed a longterm evolution into components that make up ?Watch.
No I meant that will be their argument for the traditional watch. Not saying I agree but that's the argument everyone seems to use to explain away very expensive watches,
Insane. Who could have predicted this back in the 80s or 90s when Apple was just a niche PC maker for designers and "creatives"?
I'd normally cry "monopoly", but I don't think that Apple exhibits monopolistic behavior. They do their own thing their own way. I don't see them strong-arming competitors or crushing little guys (like MS did). Maybe I'm not looking close enough.
No I meant that will be their argument for the traditional watch. Not saying I agree but that's the argument everyone seems to use to explain away very expensive watches,
I know what you mean, which is why I'm commenting on how the perception of ?Watch will need to change if it's going to get people to see it as something worth handing down and not as something that will be instantly obsolete. I furthered my point by saying how I think Apple could have designed a way for that perception to be changed, by designing a way for ?Watch to remain relevant to the user many years later.
I'd normally cry "monopoly", but I don't think that Apple exhibits monopolistic behavior.
A monopoly isn't about behaviour, but rather "the exclusive possession or control of the supply or trade in a commodity or service" of which they have none. The closest they ever came was with the iPod in the PMP market, but even that was still shy of being a monopoly. The only other thing I can think of would be their mindshare, but mindshare is neither a commodity nor service so even if they had 100% of it there is nothing anyone can do… except to stop talking about Apple.
So, can you provide us any evidence that the Fed's easing is what is causing a market overvaluation today? Heck, can you provide any evidence -- other than the Shiller Cyclically-Adjusted PE, which has been implying that for the past few years -- that the market is overvalued today?
How do the PE ratios today compare to 2008? Why do you think they're high now? The Fed has been easing for a while now. How come nothing's happened yet?
You don't see hyperactive stock trading (almost across the board), plus banks buying up real estate all over the place as evidence of anything? You don't acknowledge that the crappy laws that led to the collapse have been reinstated and are now creating new a massive new bubble? Look, man. All you need to do is look.
You don't see hyperactive stock trading (almost across the board), plus banks buying up real estate all over the place as evidence of anything? You don't acknowledge that the crappy laws that led to the collapse have been reinstated and are now creating new a massive new bubble? Look, man. All you need to do is look.
No, I don't. How do you explain such low stock price volatility then, at historically low levels? Why don't we see these potential problems reflected in corporate bond rates? Why is the dollar strengthening? Why is unemployment falling? And no signs of inflation on the horizon?
I am not a fan of financial-economics-by-looking.
(Added a couple of sentences after original post).
No, I don't. How do you explain such low stock price volatility then, at historically low levels? Why don't we see these potential problems reflected in corporate bond rates? Why is the dollar strengthening? Why is unemployment falling? And no signs of inflation on the horizon?
I am not a fan of financial-economics-by-looking.
(Added a couple of sentences after original post).
I'm a fan of taking a look at what is really happening in the world and ignoring the noise that typically dominates.
No, I don't. How do you explain such low stock price volatility then, at historically low levels? Why don't we see these potential problems reflected in corporate bond rates? Why is the dollar strengthening? Why is unemployment falling? And no signs of inflation on the horizon?
I am not a fan of financial-economics-by-looking.
(Added a couple of sentences after original post).
I'm a fan of taking a look at what is really happening in the world and ignoring the noise that typically dominates.
I guess what you're saying is your economic worldview and pronouncements are based on what you see, and your gut-feel, rather than objective fundmentals like inflation, volatility, unemployment, bond rates, and exchange rates, which according to you is just 'noise.'
Hey, it's a free country! You're fee to think what you want. But don't be surprised (and get personal) if you get challenged on it.
I'm a fan of taking a look at what is really happening in the world and ignoring the noise that typically dominates.
I'm a big fan of Robert Prechter and the Elliott Wave theory, however he's been predicting the end of the financial world pretty much non stop since the mid 1980s. I have been able to make money following his short- and medium-term recommendations on stocks and currencies, but I think the big picture is just too hard to predict with any degree of accuracy that could help anyone.
For example in 2008 he was saying "see I told you so" and also predicted a total depression greater than the 1930s, to resume after a short bounce in 2009. Well, that "bounce" has lasted 6 years now, while the value of cash erodes. Other brave investors were furiously snapping up real estate and financial assets, which follows Prechter's philosophy, which is that you should buy when everyone is fearful. But he couldn't accept that early 2009 was an actual multi-year bottom that would hold at least until now into 2015.
In my view, things aren't all rosy but they aren't bubble-like, as we saw in 2006-2007. Apple's P/E currently sits at 20.62, and based on consensus estimates is 15.76 times projected 2015 earnings. in 2007 Apple's P/E was 50! And in 2007 Apple had approx. $15 billion in cash/cash equivalents, vs. about $180 billion today.
Home affordability is still better than 2008 levels, but it's rising, so that is of some concern, however there seems to be way less speculative mortgages than there was in the mid-2000s.
So in summary, the doom-and-gloom people will be "correct" on a minor-medium scale every 6-10 years (recession) and correct on a major scale about once every 60-80 years (depressions). Much like a broken clock. What's interesting is that doomsayers prattle on all through every boom time, causing many terrified people to lose out on the upswing.
In my view, things aren't all rosy but they aren't bubble-like, as we saw in 2006-2007. Apple's P/E currently sits at 20.62, and based on consensus estimates is 15.76 times projected 2015 earnings.
A clarification (but one that strengthens your point): Apple's current PE is not 20.6x, it is 17.9x. It's forward PE is 14.4x. It's forward PE ex-cash is 11x.
Comments
I don't even see Tim Cook or Steve Jobs being able to make that sort of decision without some evidence to back up the possibility of a market success. Sure, any new product is a gamble, but if every piece of evidence pointed to no interest in a solid gold (casing) version at the necessary price points I don't think it would be happening.
That is not to say it won't be a mistake. We saw the original 4GB iPhone capacity and pricing to be a mistake, but that was correctable. If no one buys ?Watch Edition they can just stop producing them. I doubt it will hurt Apple or ?Watch in the long run… but I suspect it will be popular; not by me as I'm not a fan of gold, but by enough people that I will be shocked by the ASP, if they ever break it out (which I think they will because it will be impressive).
In my opinion Apple has to address the obsolescence question with this product. I don't doubt the quality of this watch for one second. I'm sure it is second to none. I remember after the event some hands on reviews raving about the quality of the watch bands. That's all great but unless there is some sort of upgrade path who's going to want to shell out thousands of dollars when in 2 years snother one comes out with more sensors, maybe GPS, etc. Are gen 1 owners out of luck? Or are they able to swap out the watch and keep their bands? Or trade in their watch for a new one?
My point exactly. Gen 1 ?Watch case stays the same forever, electronics are upgraded over time for a fee.
Apple might release new models alongside the first one over time. E.g. MacBook Pro, MacBook Air.
It could be something like this: upgrade the battery for $99, upgrade battery + electronics for $199 (or more).
On the other hand, maybe Apple will require upgrading the electronics along with the battery.
No decision for techno-moron end-users to make, and it would keep all end-users within 2 years of "current."
That would make it easier for developers, since they'd only have to support ?Watches up to 2 years old.
Keeping the case the same size ad nauseam will help to maintain resale value (eBay) of older ?Watches.
I imagine Apple could start a trade-in program for ?Watch, like they do for iPhone / Mac etc.
And, of course, there will probably be a special AppleCare plan for the ?Watch.
But who really knows?
The unknown has never whether "rich people" can afford it, its whether "rich people" will look at ?Watch as jewelry or as CE. The latter being something that "rich people" often tend to not invest well. I literally know people that would have a multiple cars that cost well over $100k each that they would drive sparingly, but then pay hardly anything on a WinPC that they frustratingly used for a good part of their waking day. That is the challenge for ?Watch which is why I hope they have built-in some sort of upgrade process so that the particular ?Watch styling of a particular year can still be useful as CE many years down the road.
Rolex, and others are mechanical watches. Their moving parts have been shrunk down as far as humanly possible.
But Phil Schiller isn't on stage talking to an audience full of rich people (outside of the front row full of Apple execs).
I get that. But the $349 price has already been announced so for this event (assuming Apple has one) I can damn well guarantee you the media will focus on one thing: the price of the Edition watch. Every tech, news, financial, pop culture site will focus on the $10K edition watch as if the $349 aluminum one didn't exist.
Again it's not about the sales of the gold watch. It's about perception. The perception that Apple is turning into Vertu.
What I expect to see are these so-called professional talking about you get the same functionality from the $349 ?Watch Sport as you do from the $10,000(?) ?Watch Edition, without very few (if any) noting that you can spend $5 on a watch and get the same functionality as a watch that costs hundreds of thousands of dollars (or more).
An but the $10K watch is something you keep forever and is handed down several generations blah blah blah. I hope Apple's marketing team is up for the challenge. I'd love it if Apple did something that surprised everyone to where the price of the Edition watch was overshadowed. I'm not sure what that could be though.
If it's still seen as CE and not as "ornament" then I'm not sure that will happen.
I'm hoping they are, hence my comments about the SIP being upgradable and Apple having designed a longterm evolution into components that make up ?Watch.
No I meant that will be their argument for the traditional watch. Not saying I agree but that's the argument everyone seems to use to explain away very expensive watches,
Insane. Who could have predicted this back in the 80s or 90s when Apple was just a niche PC maker for designers and "creatives"?
I'd normally cry "monopoly", but I don't think that Apple exhibits monopolistic behavior. They do their own thing their own way. I don't see them strong-arming competitors or crushing little guys (like MS did). Maybe I'm not looking close enough.
I know what you mean, which is why I'm commenting on how the perception of ?Watch will need to change if it's going to get people to see it as something worth handing down and not as something that will be instantly obsolete. I furthered my point by saying how I think Apple could have designed a way for that perception to be changed, by designing a way for ?Watch to remain relevant to the user many years later.
A monopoly isn't about behaviour, but rather "the exclusive possession or control of the supply or trade in a commodity or service" of which they have none. The closest they ever came was with the iPod in the PMP market, but even that was still shy of being a monopoly. The only other thing I can think of would be their mindshare, but mindshare is neither a commodity nor service so even if they had 100% of it there is nothing anyone can do… except to stop talking about Apple.
So, can you provide us any evidence that the Fed's easing is what is causing a market overvaluation today? Heck, can you provide any evidence -- other than the Shiller Cyclically-Adjusted PE, which has been implying that for the past few years -- that the market is overvalued today?
How do the PE ratios today compare to 2008? Why do you think they're high now? The Fed has been easing for a while now. How come nothing's happened yet?
You don't see hyperactive stock trading (almost across the board), plus banks buying up real estate all over the place as evidence of anything? You don't acknowledge that the crappy laws that led to the collapse have been reinstated and are now creating new a massive new bubble? Look, man. All you need to do is look.
No, I don't. How do you explain such low stock price volatility then, at historically low levels? Why don't we see these potential problems reflected in corporate bond rates? Why is the dollar strengthening? Why is unemployment falling? And no signs of inflation on the horizon?
I am not a fan of financial-economics-by-looking.
(Added a couple of sentences after original post).
I'm a fan of taking a look at what is really happening in the world and ignoring the noise that typically dominates.
I guess what you're saying is your economic worldview and pronouncements are based on what you see, and your gut-feel, rather than objective fundmentals like inflation, volatility, unemployment, bond rates, and exchange rates, which according to you is just 'noise.'
Hey, it's a free country! You're fee to think what you want. But don't be surprised (and get personal) if you get challenged on it.
/facepalm
I'm a fan of taking a look at what is really happening in the world and ignoring the noise that typically dominates.
I'm a big fan of Robert Prechter and the Elliott Wave theory, however he's been predicting the end of the financial world pretty much non stop since the mid 1980s. I have been able to make money following his short- and medium-term recommendations on stocks and currencies, but I think the big picture is just too hard to predict with any degree of accuracy that could help anyone.
For example in 2008 he was saying "see I told you so" and also predicted a total depression greater than the 1930s, to resume after a short bounce in 2009. Well, that "bounce" has lasted 6 years now, while the value of cash erodes. Other brave investors were furiously snapping up real estate and financial assets, which follows Prechter's philosophy, which is that you should buy when everyone is fearful. But he couldn't accept that early 2009 was an actual multi-year bottom that would hold at least until now into 2015.
In my view, things aren't all rosy but they aren't bubble-like, as we saw in 2006-2007. Apple's P/E currently sits at 20.62, and based on consensus estimates is 15.76 times projected 2015 earnings. in 2007 Apple's P/E was 50! And in 2007 Apple had approx. $15 billion in cash/cash equivalents, vs. about $180 billion today.
Home affordability is still better than 2008 levels, but it's rising, so that is of some concern, however there seems to be way less speculative mortgages than there was in the mid-2000s.
http://blogs.wsj.com/economics/2014/08/16/number-of-the-week-housing-affordability-hits-six-year-low/
So in summary, the doom-and-gloom people will be "correct" on a minor-medium scale every 6-10 years (recession) and correct on a major scale about once every 60-80 years (depressions). Much like a broken clock. What's interesting is that doomsayers prattle on all through every boom time, causing many terrified people to lose out on the upswing.
A clarification (but one that strengthens your point): Apple's current PE is not 20.6x, it is 17.9x. It's forward PE is 14.4x. It's forward PE ex-cash is 11x.