Apple rocked the entire watch industry by selling Watch as a luxury item and electronic and healthcare accessory. Actually, it was more like detonating a nuclear bomb. While the super expensive solid gold edition of the first round of Apple watches was priced at $10,000+ was a disaster that contributed to the exits of Angela Ahrendts and Jony Ive, the problem with the model was one that Tim Cook had big reservations about. It’s a problem with the business model for ultra expensive watches that the Swiss Watch manufacturers did not foresee and are still struggling to find a solution to, and it’s very possible there might not be any. Apple releases new Watches with compelling new features every year, and app developers are constantly releasing new products and updating existing ones.
The traditional upscale watch strategy is that when someone buys a $20,000 Rolex or Movado, they are buying a watch they will want to keep for life and hopefully pass on to future generations. It is not upgradable, and features do not change much, if at all, from year to year, or even decade to decade. There are no apps or in app purchases. Over 10, 20, 30 or more years, there will be repeat Apple Watch purchases by many current and future Watch users, along with app and in app purchases, as well as recurring revenue from subscriptions. Apple Watches can even be used to pay for items in stores, including with Apple Credit Card. Watch helps sell ancillary Apple products like AirPods, and it will probably integrate with the VR/AR glasses we’ve been hearing about for years. Over 5-10 years, the average Apple Watch buyer will generate significantly more income for Apple than a Rolex or Patek Phillipe buyer will for their brand.