As the world digests the news of a $US17,000 Apple Watch, it’s clear: Apple is now a luxury goods company.
Andreessen Horowitz analyst Benedict Evans wrote on Thursday that the high-end gold Apple Watch can be viewed as a kind of marketing tool. “Apple might only sell a few tens of thousands, but what impression does it create around the $US1,000 watch, or the $US350 watch?” he writes. “After all, the luxury goods market is full of companies who most visible products are extremely expensive, but whose revenue really comes from makeup perfume and accessories.”
Yes, it’s true: Apple stands to benefit from the luxury allure that comes from charging five-figures for a piece of smart jewellery. But this isn’t the only reason that Apple has created such an expensive line of products. It’s fast becoming clear that Apple doesn’t think of itself as a consumer technology company any more — it is, in its mind, a luxury goods company.
And it’s all down to Jony Ive.
For starters, it has flatly refused to move down-market for years, even when it seemed sensible for it to do so. As we said earlier this week, Apple defied expectations by charging $US550 for the iPhone 5C — not the “cheap” phone people were widely expecting. “Apple made the exact right move,” we wrote. “Apple stuck by its strategy to keep its prices high. If Apple had lowered the price of the phone, it would have killed what made Apple special.”
But it’s not just a drive to protect the cachet of a high-end technology brand. The company’s senior management is increasingly filled by senior executives from the luxury goods industry, bringing with them a totally different mindset to the established technology industry.
The most prominent hire is Angela Ahrendts. Poached from luxury goods company Burberry in 2013, she’s now Apple’s SVP of retail and online stores. Ahrendts is one of Apple’s most visible execs, and has been driving redesigns of Apple Stores, including the company’s aggressive retail expansion in China.
But she’s not the only one. In July 2013, Apple hired Yves Saint Laurent chief executive Paul Deneve to work as VP of “Special Projects,” reporting directly to Tim Cook. Deneve had previously worked for Apple in the nineties before moving to the luxury industry, where he also worked for Lanvin and Nina Ricci. Media reports at the time of his rehire by Apple suggested he was going to be responsible for the the rumoured “iWatch.”
Within a year, Deneve poached another senior figure from Yves Saint Laurent to work under him, 9to5Mac reported — YSL’s Europe President and Retail Head Catharine Monier.
Also in 2014, Apple picked up Musa Tariq to lead its social media efforts. He’d previously worked at a senior level at both Nike and Burberry, where 9to5Mac reports he was Ahrendts’ “confidant.” She “loves [Tariq] to bits in a colleague kind of way,” a source told the tech blog.
Ben Schaffer is another 2013 hire from the fashion industry — this time from Nike.
In July 2014, Apple hired Patrick Pruniaux away from luxury watch maker Tag Heuer, where he had been vice president for sales. His LinkedIn profile lists his as a “Senior Director” of Special Projects at Apple, so likely also working on the Apple Watch.
And then there’s Marc Newson. A long-time friend of Apple design chief Jony Ive, Newson is a legendary designer, and was hired by Apple in September 2014. He has created numerous limited edition luxury products, including Leica cameras, speedboats, jetpacks, the interior of a concept spacecraft, and a a Beretta shotgun.
In some ways, Apple is similar to electric car manufacturer Tesla. Tesla actively hires Silicon Valley engineers as it takes lessons from the tech giants (in particular Apple). Tesla is an automobile company modelling itself as a tech company, while Apple is a tech company modelling itself as a luxury goods company.
This push to recruit senior figures from the luxury industry is likely down to the growing influence of Jony Ive, Apple’s head of design. Google Ventures partner MG Siegler recently wrote that the Apple Watch stands for “a new Apple that is just as much about fashion as it is about function. This is no longer Steve Jobs’ crossroad of technology and liberal arts. It’s the fork in the road between technology, liberal arts, and fashion. Jony Ive’s fork.”
Ive has worked closely with Ahrendts on Apple Store redesigns. And a recent profile in the New Yorker of the designer reveals he was the one pushing so hard for a $US10,000 Apple Watch — despite the concerns of others at Apple. A former colleague, Clive Grinyer, told the New Yorker that Ive has “always been a bit bling,” and that he has “always wanted to do luxury.”
We’re seeing the results: In January, it was announced that Apple’s products are now the most popular luxury gifts in China, beating out Hermes, Louis Vuitton, Gucci and Chanel for the top spot.
The new Apple is a luxury goods company, and Jony Ive is its architect.
It’s now been announced that Jony Ive — along with Marc Newson — will be appearing at Condé Nast International’s first ever “Luxury Conference.” They’re going to be discussing “the new 21st century definition of luxury,” as the conference explores the “new world, in which technology competes with hard luxury — watches and jewellery — and leather goods.”
Vogue International editor Suzy Menkes said that “Apple is now a powerful part of the luxury industry. The iPhone, iPad, and the upcoming Apple Watch are in direct competition with handbags, timepieces and high end accessories.”
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