A $83.70 Apple Watch makes no sense, and here is why.
Looks like we are at it again. A recent wave of “click-bait” articles has set the Web on fire, with the notion that the Apple Watch Sport Edition is worth much less than the posted price of $349.
The $83.70 figure comes merely from the collective cost of materials, but is the Apple Watch just that? Lights and clockwork? Or are we missing (just) a few parts of the final equation?
If we were to give you $83.70, could you make a product comparable to the Apple Watch, and sell it?
Apple, for one, would be very interested in knowing how to magically manufacture, assemble and package, the Apple Watch, without any kind of design concept development, manufacturing, marketing, warehousing, and without having to pay any fees, or register any patents for any of the technology used in the Apple Watch. All Apple would need, is parts. And a genie waving its hands.
It would be great if the same could be also applied to MacBooks, iMacs or iPhones, but it isn’t, and so far, no one complains about that. Why?
It’s never as simple as “Supply and Demand”
When Apple creates a product, it usually ships in staggering numbers, which means, manufacturing must be executed in record time using contractors, which is what Apple does to make its products a reality. Whenever a new MacBook or iPhone is made, a number of manufacturers are contracted to take part in the creation of a new product.
This necessity is only one of the factors that drive the price up. Manufacturers need to make a profit too, and it’s not easy to calculate profit margins when Apple asks a company to make millions of touchscreens in a couple of months.
If we also take into account all the Apple Watch units, that did not make it to the stores, due to defects and imperfections, there is a large portion of materials and labor for which Apple will not see a profit.
It’s also not that easy to pick the right manufacturer, which leads sometimes to hard lessons, such as the GT Advanced Technologies incident, which caused the sapphire crystal manufacturer to crash and burn.
Once a product is ready to ship, like the new MacBook Retina, marketing is yet another expense that is necessary, and gigantic. The showmanship of each stage event in which a new product is introduced has proven a fantastic method of advertising.
Without the type of marketing Apple has developed over decades, advertising even the most advanced and amazing piece of technology would feel like starting the Super Bowl without the National Anthem. It just wouldn’t feel the same.
The attention to detail and theatrics that Apple fans have come to love, is part of an experience that Apple also must factor in, and cannot avoid.
All advanced technology is expensive and difficult to make. The same holds true for motor vehicles, real estate, and anything that can be bought brand new, so before calling the next tech gadget "overpriced", we should perhaps step back , and think about the "real" true cost of delivering us our next favorite device.