Watch features a markup of roughly 20x on the high end over material costs; but will it appeal to luxury watch enthusiasts?

Apple, Inc. (AAPL) perhaps set a literal gold standard for consumerist excess today with the formal announcement of pricing of the Apple Watch Gold Edition.  Tim Cook called the Gold Edition the "most beautiful expression of the Apple Watch", but at the prices announced beauty might be very much in the eye of the beholder.

Speculation about pricing of the Gold Edition has been raging for months.  This model is essentially the same internals as the Watch Edition, but includes a new frame and buckle design in 18 karat jeweler's gold.  The watch comes with colored luxury leather bands.

Veteran jewelers, trying to come up with an estimate of the price, noted that about $800 USD worth of gold likely would go into the frame.  So everyone knew it was was going to likely retail for over $1,000 USD.  But early estimates of the price tag fell in the more conservative $3,000 to 5,000 USD range.

But even Apple's handpicked crowd at the media event let out "audible cries" [source] when the $10,000 USD entry price for the gold edition was announced.  And it turns out that's only the start.

The full list of limited edition gold Apple Watches is listed below.

rose gold w/ black or white plastic band -- $10,000 (38 mm) / $12,000 (42 mm)

Apple watch -- gold edition cheapest model

yellow gold w/ sport band (black) -- $10,000 (38 mm) / $12,000 (42 mm)

Apple Watch w/ sport band gold edition

yellow gold w/ black leather band w/ classic buckle -- $15,000 (42 mm only)

Apple Watch w/ black leather, yellow gold

yellow gold w/ midnight blue leather band w/  classic buckle -- $15,000 (42 mm only)

Apple -- 42 mm only midnight blue apple watch gold edition

rose gold w/ luxury band (rose gray) w/ modern buckle -- $17,000 (38 mm only)

Apple Watch -- Gold

yellow gold w/ bright red leather band w/ modern buckle -- $17,000 (38 mm only)

Apple Watch Gold

The priciest models -- the 38 mm models with "modern buckles" -- top out at an incredible $17,000 USD.

To be clear, it's not unheard of for luxury watch brands to command these kinds of prices.  In fact, luxury watches can cost much, much more -- such as the Roger Dubuis Excalibur Quatuor ($1.125M USD) or the Jaeger-LeCoultre Hybris Mechanica à Grande Sonnerie ($1.474M USD).

But generally speaking luxury watches share a few strong justifications for their price points (be they $10K or $1M USD):
  • Veteran brand name
    • Patek Philippe was founded in 1852
    • Jaeger-LeCoultre was founded in 1833
    • Note: in some cases there is a new brand, e.g. Roger Dubuis, but typically these arise from spinoffs of a luxury brand (in Roger Dubuis's case, Patek Philippe)
  • Mechanical integrity/longevity
    • Watch will last for a half century or more meaning you can pass it on to your kids, grandkids, etc.
  • Craftsmanship
    • Every detail is honed to microscopic precisions
    • Failure rates to defects are rare and brands will quickly offer replacements/repairs should they occur
  • Features
    • Pricier Swiss watches can often pack a dozen or more complications (what's that?)
    • Watch internals can compensate for the Earth's gravity, update themselves in zones with no data access, and more.
That's what makes the Apple Watch such a puzzling offering.
  • Brand name
    • There's no luxury nameplate -- just the Apple brand, which is associated with mass market consumer electronics.
  • Mechanical integrity/longevity
    • The device has a lithium ion battery, which typically goes bad within 5 years.  Even if you're exceedingly lucky, your Apple Watch will require a battery swapout within 8-10 years -- likely far sooner.
    • The warrant against mechanical failures is only 2 years
    • Even if you pay extra the warranty will only last 3 years
  • Features
    • The Apple Watch -- gold or otherwise -- is basically the exact same computer-on-your-wrist.
    • Apple values that package at <$349 USD, based on the entry model's price
    • It can rival Swiss watches when in regions with cellular connectivity, but when it comes to off-the-grid functionality the Apple Watch falls flat compared to high end luxury mechanical watches.
Now Apple does try to make a pitch in the craftsmanship department, with Apple design chief Jony Ive explaining in a video about Apple's unique hardening process, which includes milling and compression steps to create a dense, pore-free ingot from the molten gold.  Ultrasonic scanners are used to detect defects.

But all of this will likely strike luxury watch enthusiasts as a rather artificial and mass produced process.

Apple's other weak justification at the price is the scarcity of the gold edition watches.  Only "select" Apple Stores (likely those in high revenue city areas) will get them and quantities will be "limited".

But good news -- Apple generously is offering Gold Edition buyers a whole extra year of hardware coverage under its AppleCare plan.  That's right, Apple will offer technical support for your $17K watch for two years.  And it will ensure that it won't fall appart due to mechanical defects for exactly two years.  But if you want additional reassurance, you'll have to pony up even more greenbacks for an AppleCare+ warranty, which extends the device's warranty to 3 years and adds two more covered damage incidents.

If all this sounds great to you, your name might be "Floyd Mayweather, Jr."

For those with cash to burn on the Gold Edition, it is available for preorder on April 10, the same order that in-store previews begin.  Orders will ship on April 24.

Sources: Apple [product page], The Verge [livestream]

"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone

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