How Apple could release a really expensive iWatch and prime the market for the wearable revolution

How Apple could release a really expensive iWatch and prime the market for the wearable revolution

Just as they were late getting into the smartphone game, Apple has not rushed into the wrist race with iWatch. Check out Smartwatch Fans and you'll find no less than 14 smartwatches that are either available now or will be early this year. Some are from major companies like Samsung, Sony and Qualcomm. Others are from startups like Pebble and Neptune that are hoping to compete wrist to wrist with the big boys and win. So how could Apple capture not only the mind share, but make the market?

From my observations, 2013's most highly regarded smartwatch was the Pebble. The most marketed — and the one that has hit the most wrists to date — is the Samsung Galaxy Gear. The Gear is also the one that's probably been returned the most. 

Prior to 2007, the smartphone industry had already been plodding along for years. Predictions were that within a few years every phone would be a smartphone. Smartphone sales began moving from the early tech adopter, enterprise customer and prosumer to mainstream consumer, and the companies selling smartphones on the market began to see their sales spike. BlackBerry's share price skyrocketed as the company saw massive quarter over quarter growth in sales and revenue. BlackBerry was on the hockey stick ride to riches — they had passed the inflection point and could barely keep up with the growing levels of demand.

Then Apple announced the iPhone, and the rest as they say, is history. The success of the iPhone as a tech product is, to date, unrivaled.

Will the same be true for the wearables market if Apple announces an iWatch as as early as this year? Well, the mainstream demand for smartwatches has not yet hit that same inflection point as the demand had for smartphones when Apple entered the market. In other words, we're still on the blade and haven't hit the handle. 

The average person who owns a smartphone doesn't yet know why they'd want a smartwatch.

Browse around the web and you'll find plenty of people suggesting that smartwatches are just having a moment of glory, but that it's just a fad and it will soon fizzle out. That the demand will never move beyond the early tech adopters who are the ones reading this with a smartwatch already on their wrist. The average person who owns a smartphone doesn't yet know why they'd want a smartwatch, and even if they understood its full benefits, may still be reluctant to go out and buy one.

I firmly believe Apple has the ability to accelerate the mainstream demand for smartwatches, pushing it from the few million early adopters who want a smartwatch now to the 10+ or even 100+ million who are going to own an iWatch in just a few years.

Personally, I think a bracelet or band-style device makes the most sense and neatly sidesteps the entire watch and fashion debate. However, I also think the idea of a premium, high-end iWatch is also worth considering.

The Pebble retails for $150, the Gear for $299. Whether you personally consider those prices expensive or cheap, they are prices affordable to most people who really want to own one.  In other words, this is mainstream consumer pricing in a product category still in the early adopter phase.

In the case of Samsung, they've put their marketing might behind the Gear as they would their latest Galaxy S phone. There have been some great commercials (some awkward ones too) and they have blanketed their advertising around the globe. As a Pebble owner, I get asked frequently if it's a Gear on my wrist. Despite the awareness for the Gear, the mainstream demand just isn't there yet. It's selling, but it's not flying of the shelves. And the new and improved Gear 2 and Gear Fit won't likely change this. 

Apple has the ability, in two product generations, to build incredible mindshare and marketshare for their iWatch.

Apple however, has the ability in two product generations to build incredible mindshare and marketshare for their iWatch, especially if they cater the first generation of iWatch to early adopters who are willing to spend more money than the average mainstream consumer. In doing so, the first iWatch will become the marketing tool that creates the demand to sell the second iWatch to the masses.

If Apple created an iWatch that sold at a high price point — say $1000, or $1500, $3,000 or heck, even $5,000 or more (think of it as wearing a Mac Pro on your wrist), it would be difficult to justify and be priced out of reach for the vast majority of people. Yet, people would definitely buy it, and everybody would want it. Luxury watch aficionados may at first scorn such a watch, but there's still a large contingent who would run out and buy it. The tech fiends. All of the Valley. Everybody who's made their money in tech. And then even the luxury watch crowd will go out and buy one, because they'll just have to try it.

The iWatch would instantly, overnight become the most recognizable and sought after wrist watch on the planet (sorry Rolex). People who get spotted with one on their wrists will get stopped on the street — "Is... is that an iWatch?"

At a high price point, the iWatch goes from being a tech product to being an aspirational product. An object of desire. A luxury item. And people love luxury items. Apple has experience with this too. Look no further than the gold iPhone 5s. It wasn't even real gold — just change the color to gold and limit supply and you have schmucks out there (like me!) willing to pay $1500 or more just to get their hands on one.

Apple could definitely build a wrist-wearable product worthy of a high price tag

Unlike a gold iPhone 5s, however, Apple could definitely build a wrist-wearable product worthy of a high price tag. People have often likened the precision and design of Apple's latest generations of iPhones to that of luxury Swiss watches. I've never been a fan of that comparison, but do agree that Apple has the ability to create great hardware with extremely tight tolerances and elegant finishes. There is no doubt they could develop amazing hardware around an iWatch.

Looking at the luxury watch market as a proxy, there is a lot that can be done to a watch to build value into the hardware, from both a design and functionality perspective. Apple wouldn't go all Virtue and bling up the iWatch with gold or diamonds, but they could put a sapphire crystal on it (makes it scratch proof) or create an iWatch that is submerssible to 300 meters. They could, finally, do something amazing with LiquidMetal.

Of course, an iWatch could take sensors to another level as well. Looking at what Apple has done with Touch ID, it's not hard to imagine the bottom of the iWatch monitoring temperature, pulse, etc. in addition to all the usual motion trackers you'd expect.

It will be a watch that Jony Ive would want to wear.

Apple's CEO Tim Cook made the point that if you asked a room full of teenagers to raise their hands, that you wouldn't see many watches being worn today. That's true. The first iWatch won't be for a teenager to wear though. It will be a watch that Jony Ive would want to wear.

The software will have to be good, but since Apple will own the software end to end from iPhone to iWatch, you know the integration will be better than anything a third party company can do that works with iOS.

With the success and learnings from their first iWatch, and with the mainstream market now educated about what the iWatch can do and everybody wishing they too could have an iWatch like those limited people who had the first one, Apple will take the experience in their next iWatch mainstream with a less expensive version.

It's not dissimilar to the iPod model. A high-end starting point that appeals only to the high-end aficionados, but with less expensive and more mainstream models following on.

Will it play out this way? I have no idea. What I do know though is is that a person who's spent more on their luxury watch collection than they did their university education, if Apple did release an expensive iWatch I'd be standing in line to buy one the day it goes on sale.

Have something to say about this story? Leave a comment! Need help with something else? Ask in our forums!

Kevin Michaluk

Kevin Michaluk is Chief Media Officer of Mobile Nations and soon-to-be owner of a gold Apple Edition watch!

More Posts



← Previously

Rogers has new international roaming plans and they're still awful

Next up →

Google releases Helpouts app for iOS

Reader comments

How Apple could release a really expensive iWatch and prime the market for the wearable revolution


No, people aren't going to shell out that much like you're willing to. Aren't you the same guy who bought the most expensive clock app or something just to have it? Not to mention most users aren't going to shell out more than they paid for their phones for something most don't even need. It would be a hard sell for apple at a high price tag.

Are you one of the people that said in 2010 that no one would want an iPad, because "it's nothing more than a really big iPhone"? That's what a lot of people said. But then it launched. And everyone wanted one. The iwatch will be the same.

Sent from the iMore App

Seeing how I never mentioned it being a smaller phone, no. I was talking from a price standpoint. And I guess we will find out "if the apple loyal" will buy it if apple ever releases it, and at a high price point

Sent from the iMore App

That is true but the iPad was a whole amazing platform (which i didn't think was a big iPhone by the way). Whereas the iwatch while a new platform would be incredibly expensive shutting out consumers and developers alike,thats not a good thing,the iwatch would be be much less likely to be able to stand up on it's own two feet and would not have much in terms of apps to offer apart from watch faces maybe some biotech and notification pushes. It could a digital life collector which makes some peoples lives much easier, but you couldn't build a huge platform on that i don't think especially if it was really expensive. However i hope i'm proved wrong and apple does something revolutionary that people didn't know they needed until now, as that also tends to be what they do

TL;DR the iPad was a revolutionary new platform the iwatch couldn't really be developed for much especially if it's expensive

I woundn't spend more than $300 on any smart watch, and for that price it would have to be slimmer and more innovative than anything out there.
Any electronics coming out today has a livespan of a few years. In three years, that smart watch will look like a Palm Pilot strapped to your wrist. No amount of titanium, gold and jewels will change that. If I would spend $1000+ on a watch, I would expect it to be eventually a heirloom for my kids.

Completely agree. I give the articles writer credit for thinking outside the box but his proposal makes no sense. Apple did not introduce a high priced iPhone or iPad and then sell a lower priced one after people were desiring them. I'm not gonna say the watch or whatever they end up calling it won't be a standalone device but I would assume it will compliment an iPhone. Having said all that, I can't see how Apple could justify this thing being anymore than half the price of an iPhone. It's just a wait and see for me, Apple makes great stuff but I will have to be convinced that this thing is something I would use. We are already so connected with our phones, to me things like Google Glass are interesting but absolute nonstarters for me.

I agree. I wrote this editorial back in January literally based on a dream I had. Didn't publish it as I felt it was wrong. Which I talk about on latter podcasts linked to in the post. That said, though I think it's wrong I still would buy and expensive smartwatch. And Rene figured the editorial was still worth posting as a conversation starter.

Take it as just that.

Posted via the Android iMore App!

Android ware is the future for watch companies. It may take a year or two till that happens or the tech get a little thinner or batteries last long enough for the watch makers to jump on board.

My prediction is that the last thing people will use this thing for is telling time. I think it will be priced at $349 or $399, with multiple colors. I don't know if it's possible but I would love to see this run off kinetic or solar power and not need a charger at all!

But that's what Apple can do: turn a niche into a mass market product. Apple, as a brand, definitely has the ability to accelerate the wrist-tech arena. If they will be bothered to do so is another debate.

Posted from my TARDIS!

"If Apple created an iWatch that sold at a high price point — say $1000, or $1500, or heck, even $3,000 or more ... it would be difficult to justify and be priced out of reach for the vast majority of people."

$1000 iWatch -> $100 million in profit per year, max.
$100 iWatch -> $100 million in profit per year, max.

Flip a coin.

I'm a watch collector and if its a quality, classy looking timepiece such as a Breitling, Tag Heuer, Hublot or something on those lines, I'd buy it.

Smart watches now aren't very fashion forward or appealing at all!!

I always thought that one of the appeals of the high-end watch was not just its precision manufacturing and beauty, but its longevity as well. A well built mechanical timepiece should last for generations. I cannot see and electronic watch doing this, the battery alone will limit its usefulness. What do you think about that in terms of someone spending $1000 to $3000 on an electric watch?

Meh... I'll stick with my Tag Heuer for now--no thanks...

Besides, what would battery life be like? I'd have to charge it too often with current battery technology.

Galaxy Gear at least looks better than Pebble, which looks like a watch a kid won from a crappy local arcade or a school carnival. Both are lame though. Dweeb-ware for people who wish another Star Trek tv series would debut... hahaha

I agree with you that it does kinda look like a kid toy, but since I switch between iphone5/htc one, the pebble suits my needs. Where I work it has come in handy while out in the field where my phone is unreachable in my pocket. The galaxy gear does look better but I do still love my Seiko :P.

I don't like Star Trek, and I have a pebble! I also have a really Hot girlfriend:)

Posted via the Android iMore App!

Wouldn't spend over $200 for an iWatch. But i am waiting for Apple to do a watch, I like the Pebble steel, just waiting patiently for Apple

Sent from the iMore App

For 1500$ that you'd spend for a glory band that may not necessarily make you more productive or a better person - you could sponsor a child for 1-2$ a day and change his life !
In the mean time my dysfunctional iphone vibrate button is kaput from almost new and now it's outa warranty cause am traveling and they won't fix it.
Maybe apple needs to get small things right first.

Sent from the iMore App

Nothing personal, but this is a really flawed analysis. I didn't even read to the end (I did skim) because of the egregious errors of the first part, but IMO if Apple makes a high end "watch-watch" that competes with other watches and jewellery that "I've would wear" then this would be a big indicator of Apple being on the way out.

Just to mention one HUGE error in your analysis ... in 2007, the prediction actually *wasnt* that everyone would have a smartphone in a few years. This may have been said by some, but in fact the market was dominated by feature phones, and smartphones were a small and essentially non-growing category. These too are generalisations, but they are closer to the truth than your generalisations.

The smart phone in everyone's hand today is down to Apples revolutionary product (and it's imitators), and the fact that there was a much larger, already existing feature phone market, just waiting to be up-sold to a smartphone.

In other words, these conditions don't exist in the wearable a market right now and it's a completely different thing.

I don't believe or trust anyone that sets their theoretical spending limit on an iWatch they know nothing about. it's like watching the realtime bids on Ebay. Everyone sets their maximum spending limit until they are outbid by $20 and they set their maximum a little higher. You don't know what this wearable will offer at all. And I'm not talking features. I'm talking about what this device will bring to your existing ecosystem. An iWatch could very well offer more functionality and even connectivity than iPhone. You might not be able to browse, use Facebook or play games on it but it might tell you things about yourself and create a profile of health and usage that you could not know otherwise. That could add up to over $1000 of value to me but who knows. Not anyone here.

Wow! Great article. Although I don't like the idea of not being able to afford one when it comes out that all makes a lot of sense. Really good job with this!

Sent from the iMore App

I don't think Apple can compete with Google's directions of making an OS for "ANYONE" to use. Rolex or other luxury brands can take Google Ware and make their products which would be better than any Apple made watch. Rolex has all those watch designs. All they are doing is taking out the mechanical parts for the computer parts. They put their existing watch faces and BOOOM, they have a product by a REAL luxury company that looks the same with the same watch face but with smart bit from Google. For Apple customers who just want a $300 watch I can see them buying Apple. If your rich and you have a Rolex or other luxury brands then your not turning in your Rolex for an Apple watch.