Here's How Apple Might Be Able To Justify Charging $US10,000 For A Top-Of-The-Line Apple Watch

Apple Watch Edition rose goldAppleApple Watch Edition in rose gold.

Apple writer John Gruber made waves when he suggested that Apple might charge $US4,999for the top-of-the-line gold Apple Watch.

He went further, saying he made a friendly bet that Apple would charge $US9,999. The lowest price he could envision Apple charging is $US1,999.

These are high prices, especially for a first-generation technology gizmo that is likely to be useless in the next four years.

Apple has already announced that the Apple Watch will start at $US350 for the entry model, but it didn’t say how much it would be charging for its high-end models. So, $US5,000 is entirely possible.

Gruber’s rationale for the high price: The gold Apple Watch is solid gold, which is expensive. He says you can’t find a top-of-the-line gold luxury watch for under $US20,000. Therefore, there’s no reason to think Apple is going to be cheaping out with its gold watch.

The problem, beyond cost, with charging $US5,000 for an Apple Watch is that technology moves quickly. A $US20,000 Rolex is going to be valuable for the next 50 years as it’s passed from generation to generation.

Compare that to, say, the first iPad, or the first iPhone, which is utterly worthless. If you have an original iPhone it probably barely works. It will struggle to support any current apps or features. It’s obsolete. It’s not even valuable as a collectors item since Apple made millions of them.

So, who would pay $US5,000 for a watch that’s going to be obsolete in 4 years?

In a three-hour podcast talking about the Apple Watch, Gruber had an idea about how Apple could justify the high price tag for anyone worried that their expensive watch will turn into an expensive brick in a few years.

He speculated that Apple could make the computer chip that powers the Apple Watch replaceable. This would keep the watch valuable because you would just upgrade its internals from time to time.

In fact, it could make the Apple Watch even more valuable as a timepiece. It would be a first edition collector’s item that would grow in value over time.

This seems to be just wild speculation on Gruber’s part. It doesn’t seem to be based on talking to people that work at Apple. However, he’s generally a pretty smart guy, and is in touch with people at Apple, so who knows. Either way, it’s an interesting thought experiment.

Gruber’s idea seems to be inspired by the webpage Apple set up for the technology in the Apple Watch. It has a special section dedicated to the S1 chip. Here’s what it looks like.

Apple S1AppleApple’s S1 page.

The key thing to Gruber seems to be the following, “We found a way to integrate many subsystems into one remarkably compact module, which is then completely encapsulated in resin to protect the electronics from the elements, impact, and wear. Configuring an entire computer system on a single chip is an industry first and represents a singular feat of engineering and miniaturization.”

The wording here makes it sound like there’s a chance that Apple would be able to remove the S1, and replace it with, say, the S2, or S3 in the future. After all, Apple has the entire computer on one chip. It just has to rip out that little computer and replace it with a new one.

As it upgrades the computing power, it could just replace the chip for, say, $US500, guesses Gruber. This sounds high, but this is what it costs to service a high-end luxury watch every few years. If this were to happen, it would solve the problem of turning the watch into an obsolete brick after a few years.

There are, obviously, quite a few problems with this idea. Apple’s innovations and progress don’t just happen on the outside of its gadgets. While we all see the outer designs of Apple products changing, what’s happening inside the products is even more radical on a year to year basis.

For this idea to work, Apple would have to be committed to the same shape for S-chip for a long time. Perhaps forever. This seems unlikely, but then again the general shape of the A-chip that powers the iPhone has remained relatively constant.

The other parts of the watch would evolve, and perhaps this would be a problem for the S chip to power the Apple Watch. But, Apple says the entire computer is on one chip, so there shouldn’t be much else in the phone other than a battery.

This is all speculation, but it’s a lot of fun to think about. Apple would totally upend the traditional gadget model, and it would (somewhat) justify spending thousands of dollars on a watch since the watch would be useful for years and years to come.

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