Former Apple exec Jean-Louis Gassee may have found the Apple Watch’s Achilles heel: there’s no carrier subsidy.
“That could be a problem when Moore’s Law makes the $US5K high-end model obsolete,” said Gassee.
Moore’s Law says that circuits become about twice as dense every two years, which usually means you can get a device that’s twice as powerful for the same price.
That’s not such a problem when you want to swap out your smartphone for a new one every couple of years, because carriers make it seem cheaper by subsidizing the purchase price of the phone. (Although you pay for it over time.)
But it’s been a problem for the iPad, which people are holding on to much longer than they are with phones. And it’s likely to pose a similar problem for the Watch.
The regular Apple Watch, which will probably be around the cost of an unsubsidized iPhone ($US650 to $US850), could be a hard sell for buyers who are used to getting phones at a fraction of their real cost (these days you can get an iPhone 6 with no money down on certain plans), then swapping them out for a new one as soon as they’re outdated.
But Gassee may be wrong when it comes to the higher-priced luxury editions.
Apple blogger Neil Cybart recently argued personalisation will be the selling point for the Apple Watch Edition.
“Apple is appealing to a small group of buyers that want luxury combined with personalisation (think different bands and faces), something traditional luxury watches are unable to provide,” said Cybart.
So the Apple Watch Edition will still sell, if to a small market. But Apple will have to do something creative if it really wants the Apple Watch to be a big hit.