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Apple Watch Flirts With One-Percenters, but Aims for Mainstream

If the Apple Watch is like other successful Apple products, it'll take a minute, and some tinkering, before it gets mainstream consumers.


At the Luxury Swiss-Made Watch store in Los Angeles’ jewelry district, where a platinum Rolex can cost as much as a luxury car, not a single customer has inquired about the Apple Watch since its attention-grabbing launch in San Francisco.

That’s not surprising, says proprietor Alex Akbaroff, since the $10,000-plus Apple Watch Edition hasn’t yet reached stores and will be available in limited quantities through a handful of high-end establishments. Akbaroff predicts some collectors will purchase the 18-karat gold watch as a fashion statement (or a sign of status) — but not those beguiled by the motion of classic timepieces.

Investors attending the Apple Watch event have been fixated on this question: Could the Apple Watch really compete with an heirloom-quality Rolex or a Patek Philippe’s delicate grandmaster chime?

The question’s moot. That’s not the market Apple is after. The Cupertino-based electronics giant didn’t get to be a $712 billion company by designing products for the 1 percent. It appears to be aiming the Apple Watch at the fat middle of the market, where some 5.5 million watches are sold at prices ranging from $150 to $1,000 and which accounted for $1.7 billion in revenue last year in the U.S. alone, according to market research firm NPD. That’s a space occupied by such brands as Movado and Fossil — two companies whose stock prices have dipped over the last year, suggesting investors may think they’re vulnerable.

Apple Watch will start at $349, with most models ranging in price from $549 to $999.

NPD Group

For the moment, it may be hard to see the Apple Watch as a mainstream proposition. It will undoubtedly take some time to gather momentum. Since it requires a connection with an iPhone 5 or iPhone 6, initial sales likely will be limited to Apple devotees.

And it’ll require a flawless execution, free of embarrassing glitches like the one software update that briefly disconnected about 40,000 iPhone 6 and iPhone 6 Pluses from mobile networks.

The company has had a habit of launching new products that appeal to Apple enthusiasts — the first iPod, the iPhone, even its first Mac — but which didn’t find mass appeal until the following product generation.

Sometimes getting the price right takes a bit of time, at least to appeal beyond the Mac faithful.

Consider the iPod, a digital music player promoted in 2001 with a marketing pitch that now seems quaint: “1,000 songs in your pocket.” The original iPod cost $399 and was limited to Mac users — and Apple sold a mere 125,000 in the first year. Apple introduced three versions a year later, including one at a substantially lower price of $299. Sales finally took off in 2003, with the third-generation iPod that would work with Mac and Windows computers (and the online iTunes Music Store similarly migrated to the PC in a development Apple’s late co-founder, Steve Jobs, memorably trumpeted as “hell freezes over”).

The music player, with its memorable dancing-silhouette TV commercials, would became the fastest-selling music player in history, breaking the 100 million barrier in five-and-a-half years.

The iPhone similarly got off to a slow start.

Apple entered the smartphone market with a $600 device that was available exclusively through a single mobile carrier, AT&T, in 2007. Apple shaved the price to $400, which helped spur sales. But it wasn’t until Apple dropped the price to $200 (with heavy carrier subsidies) on a handset that connected to the speedier 3G network that things really took off in 2008 — Apple sold over 10 million units in five months. (The iPhone 6 and iPhone 6 Plus hit that sales milestone in the first weekend.)

The last product unveiled by Jobs, the iPad, was the subject of derision for a name that evoked a feminine hygiene product and for lacking any obvious utility. It would become one of the 10 best-selling consumer products of all time, with Apple’s sales exceeding 250 million units since 2010 — though obviously slowing in recent quarters.

As with the products that preceded it, I suspect it will take a minute, and some tinkering, before the Apple Watch finds its way onto the wrists of everyday consumers. After an initial burst of sales, it will likely have a slow build as the horologists in Cupertino work to find the right mix of features and pricing that will give the device broad appeal.

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