$1000 materials costs
$1000 retail markup
$2000 Apple's gross profit (no way they will get less gross profit % than iPhone)
Retail cost minimum = $4000
now if they do 1 or more ounces of gold everything goes up.
Why are you adding $1000 markup on costs and then marking that up again with 50% gross margin? They already have a retail operation and they're making their own products selling direct to buyers. Luxury watch makers go through resellers.
In a Swiss watch, it uses more gold for a start because the gold covers the whole back and some of the internals, easily $1500 costs. They're not going to put mass-manufactured Chinese internals in either so the costs, even for automatic parts is higher. They'd then sell these watches with a huge markup like 100% to resellers so resellers pay $3000. These resellers have to cover their overheads, security, insurance (things Apple already has) and so they mark up the wholesale price 50% again to get ~$4500.
Cut out the resellers, lower the retail cost as it's already setup, lower the internals costs due to Chinese manufacturing, lower the gold used as most of the back isn't gold, no internals are and even with the same kind of margins as the Swiss manufacturer, you come in just over $2k. These $5k-10k prices are pure fantasy. If Apple priced the Apple Watch like that with the vast majority of it profit margin, buyers would have to be completely insane to buy one over a Swiss watch because it doesn't have anywhere near the cachet.
The Apple Watch is made to be worn constantly. People aren't going to go about wearing a $10k digital watch in everyday circumstances. Even $2k is pushing it but people use $2k laptops.
There are some stats here about Swiss watchmakers. About 6% of under 30m units use precious metals in some way:
Rolex makes an estimated $5b and sells about 1m units so average selling price of $5k. These guys are playing on their brand and the uniqueness in manufacturing. These are sold as though they are works of art, it's all perception. Like paying over $1000 for a meal from a top chef.
Apple can't get away with doing that. All they're doing is wrapping the same digital watch that they sell for $350 in a gold case. Jony Ive isn't hand-crafting each one and delivering it to you in a carpeted room with a glass of wine in front of an open fire while wearing a cravat, getting his butler Jeeves to unlock the glass storage case and presenting it to you on a velvet cushion. I'd say the price range will be between $999-2999 and the only reason for the $2-3k range would be to allow for the fluctuation in gold prices and forcing some exclusivity on it.
You are missing the point. Even AUTOMATIC (non-hand built) solid 18k gold watches don't sell for less than $3000.
No way on earth Apple charges less than $5000. If Apple uses 2 ounces of gold it will be closer to $10,000.
There are many additional costs associated with solid gold watches: harder to manufacter, gold prices risk, thief risk, storage risk, transportation risk, insurance, training, new displays, marketing, ect, ect,ect.
But most importantly it is pure LUXURY item. You don't want to be the cheapest GOLD WATCH in the entire market. You want to give buyers EXECUSIVITY. You won't get that selling a $2000 watch.
I don't think automatic means what you think it means.
My friend takes his Rolex every 5 years and it cost him $300-$400 for regular maintenance and much more when he had to get a repair. Those are added costs that people forget about when they talk about the value of a Rolex.
I can see the GoldWatch being the same. Upgrade the internals every 3-4 years for just about how much it cost to bring a Rolex in for regular maintenance. Theoretically the AppleWatch should be able to last for decades and just the internals need to be replaced every 3 years for $400 and the screen every 10 years for $200.
Last watch I wore (years ago) it cost me about $30, lasted about 3-4 years and was very simple. When the battery died, I quit wearing watches. ????
I felt like I was missing something. I would love to see a new Apple TV with 4K and HEVC/H.265 support, but I'm not sure we will until 4K content is available on iTS. If Netflix is doing it now couldn't Apple? Or at least a move to HEVC, without saying they support 4K right now. I wouldn't think the video codec change would require any new contracts to be signed for content. But would Apple do that with iTunes Store now before all their devices have been given HW decoders for HVEC? And then there is the annual iTunes even that typically takes place in the Fall. That seems like a better place for a new Apple TV.
I predict it will be the other way around. As soon as Apple announces an Apple TV with H.265 support, 4K UHD content on iTunes Store is likely to be announced at the same time. It's how they do things. HDMI 2.0 with 1.4 compatibility would be nice, forward-looking option as well.
I predict it will be the other way around. As soon as Apple announces an Apple TV with H.265 support, 4K UHD content on iTunes Store is likely to be announced at the same time. It's how they do things. HDMI 2.0 with 1.4 compatibility would be nice, forward-looking option as well.
1) I guess 1.4 would at least be needed for UHD@60Hz. I had failed to mention that, too.
2) I'd like it to be sooner rather than later, but they really do seem to like iTunes stuff in the Fall. Perhaps having to start the migration to UHD and/or H.265 content takes time and needs some advanced notice, and perhaps developers testing the version of iTunes that will need for these videos.
Comments
Why are you adding $1000 markup on costs and then marking that up again with 50% gross margin? They already have a retail operation and they're making their own products selling direct to buyers. Luxury watch makers go through resellers.
In a Swiss watch, it uses more gold for a start because the gold covers the whole back and some of the internals, easily $1500 costs. They're not going to put mass-manufactured Chinese internals in either so the costs, even for automatic parts is higher. They'd then sell these watches with a huge markup like 100% to resellers so resellers pay $3000. These resellers have to cover their overheads, security, insurance (things Apple already has) and so they mark up the wholesale price 50% again to get ~$4500.
Cut out the resellers, lower the retail cost as it's already setup, lower the internals costs due to Chinese manufacturing, lower the gold used as most of the back isn't gold, no internals are and even with the same kind of margins as the Swiss manufacturer, you come in just over $2k. These $5k-10k prices are pure fantasy. If Apple priced the Apple Watch like that with the vast majority of it profit margin, buyers would have to be completely insane to buy one over a Swiss watch because it doesn't have anywhere near the cachet.
The Apple Watch is made to be worn constantly. People aren't going to go about wearing a $10k digital watch in everyday circumstances. Even $2k is pushing it but people use $2k laptops.
There are some stats here about Swiss watchmakers. About 6% of under 30m units use precious metals in some way:
http://www.wthejournal.com/en/pages/swiss-watch-industry-figures
http://www.ebay.co.uk/gds/It-does-not-take-a-year-to-make-a-Rolex-/10000000000017874/g.html
Swatch group is the largest and they make about $9b per year in revenue. Their financials are here, most units are in Swiss currency:
http://www.swatchgroup.com/en/investor_relations/annual_and_half_year_reports/annual_report_2013
Rolex makes an estimated $5b and sells about 1m units so average selling price of $5k. These guys are playing on their brand and the uniqueness in manufacturing. These are sold as though they are works of art, it's all perception. Like paying over $1000 for a meal from a top chef.
Apple can't get away with doing that. All they're doing is wrapping the same digital watch that they sell for $350 in a gold case. Jony Ive isn't hand-crafting each one and delivering it to you in a carpeted room with a glass of wine in front of an open fire while wearing a cravat, getting his butler Jeeves to unlock the glass storage case and presenting it to you on a velvet cushion. I'd say the price range will be between $999-2999 and the only reason for the $2-3k range would be to allow for the fluctuation in gold prices and forcing some exclusivity on it.
The app that gives you a countdown to the day that the Apple Watch is discontinued.
Best comment of this thread by far.
You are missing the point. Even AUTOMATIC (non-hand built) solid 18k gold watches don't sell for less than $3000.
No way on earth Apple charges less than $5000. If Apple uses 2 ounces of gold it will be closer to $10,000.
There are many additional costs associated with solid gold watches: harder to manufacter, gold prices risk, thief risk, storage risk, transportation risk, insurance, training, new displays, marketing, ect, ect,ect.
But most importantly it is pure LUXURY item. You don't want to be the cheapest GOLD WATCH in the entire market. You want to give buyers EXECUSIVITY. You won't get that selling a $2000 watch.
I don't think automatic means what you think it means.
Last watch I wore (years ago) it cost me about $30, lasted about 3-4 years and was very simple. When the battery died, I quit wearing watches. ????
I predict it will be the other way around. As soon as Apple announces an Apple TV with H.265 support, 4K UHD content on iTunes Store is likely to be announced at the same time. It's how they do things. HDMI 2.0 with 1.4 compatibility would be nice, forward-looking option as well.
1) I guess 1.4 would at least be needed for UHD@60Hz. I had failed to mention that, too.
2) I'd like it to be sooner rather than later, but they really do seem to like iTunes stuff in the Fall. Perhaps having to start the migration to UHD and/or H.265 content takes time and needs some advanced notice, and perhaps developers testing the version of iTunes that will need for these videos.