Gene Munster: Steel Apple Watch To Start At $499, Edition At $4999
The stainless steel Apple Watch model, which also features a more expensive sapphire glass cover, is expected to start at $499 to $549, again depending on customizable features. [Piper Jaffray analyst Gene] Munster sees an overall ASP [average selling price] at around $650 for the mid-tier Watch series.
This is the price-point I’m personally looking for. It’s very clear that Apple Watch — not Apple Watch Sport — is the main version here. Yes, Apple expects to move more Sports than any other model, but the stainless steel versions take top billing on Apple’s website, and they’re the ones with the most available band options. More bands options clearly mean a higher likelihood of repeat purchases (by customers with a few extra dollars to burn compared to the “bargain hunters” that Sport might attract), and that’s where Apple has an opportunity to make serious bank. Steel may cost more than the Sport, but it really seems like this is the model for the masses, if not in pure marketshare then certainly in mindshare. I just don’t want to pay a thousand bucks for one (and you probably don’t either), so I really hope Munster’s right.
Of course, Munster goes a little bit off the rails with his next estimate:
Based on current pricing for Apple’s silicon iPhone 6 cases, which come in at $35, Munster sees elastomer Apple Watch straps to start in a similar $29 to $35 range, while leather bands could be priced between $49 to $59. Pricing for metal bands like the link bracelet and Milanese loop are more difficult to determine, but the analyst believes steel versions will come in at $99, while gold bands could be priced into the thousands of dollars.
These price-points (except for the mentioned gold bands, which are unannounced and potentially nonexistent as official Apple wares) are laughable to me. Apple says on their website that the stainless steel bracelet takes nine hours to make — nine hours! I don’t see how Apple sells that for $99. Munster also makes the mistake of comparing the leather on the iPhone 6 case to the leather Bands Apple is selling. Does Munster really think that Apple uses leather from a small French tannery established in 1803 for the iPhone 6?
C’mon Gene!
One final interesting point from Munster’s forecast:
The lower-cost Sport model is expected to make up 55 percent of overall Watch sales, while the mid-tier Apple Watch will take another 45 percent. That leaves very little room for Apple Watch Edition, but Munster believes Apple might sell roughly 10,000 units this year. In an interesting comparison, the firm calculates that Apple Watch Edition business could equate to about two percent of luxury watchmaker Rolex, which moves between 600,000 to 750,000 units each year.
Based on Munster’s estimate of a $4999 MSRP for Edition, this paltry quantity makes little sense. Even if the 18-karat gold versions really sell for $10,000 or more, the quantity still makes little sense. It’s way too low. Of course, prior predictions put Edition orders at one million units, which seems ridiculously optimistic at either of the above prices. Based on my look at the gold value in Rolex watches, it’s hard to believe Apple would sell its fashion flagship for such a low price. It’s just mind-boggling that anyone would buy it for more than that. But you know they will.
And so does Apple.