Tuesday, 10 March 2015

Why You'd Be Mad To Buy A $17000 Apple Watch.


So just earlier today, Apple announced to an excited bunch of journalists in San Francisco their plans to release their new Apple Watch in the coming months. The much awaited product is to go on sale on April the 24th, with a wide range of watches and accompanying straps ranging from £300 to a whopping £13500 ($350 and $17k in the USA respectively).
The lower end of that price range gets you an Aluminium watch case, and a 'Sport Band', something that appears to be essentially rubber/plastic strap (though probably one very well made). But it gets more spicy looking at the higher end of the range- for £13500 you can get an 18-Carat Rose Gold Case with a 'Rose Grey Modern Buckle' (a leather strap, pictured). Especially considering this watch performs no more or fewer functions than its £300 sibling, it seems a steep price to pay indeed.

But no, Apple are not going crazy with their pricing strategy. The watch is one of the widest ranging products in the world; you can get a £10 classic from your local Argos, or opt for something like this Blancpain Tourbillon (I'll let you check the price of that one for yourself). Watches can be quite extraordinarily luxurious goods, along with things like Fountain Pens and perhaps cars.

So why spend such extravagant amounts on a timepiece? An argument that holds for most other consumer goods is that the product's function is better if more is spent on it. A basic example is how spending more money on a TV will probably get you a bigger screen, or how a more expensive sports car is likely to be faster than a cheaper one.
However this fails to hold for most luxury goods, simply because there is usually a limit to just how good something can be. Much is made of the precision and smoothness of higher end timepieces, but for most people this is a bogus excuse for buying a watch. The owner of a cheap watch is very unlikely to be disadvantaged in comparison to a Rolex owner because his time is a few seconds inaccurate, or his watch hands don't move in a buttery smooth way. Being honest, the function of a cheap and expensive watch is usually identical; yes, more expensive watches may gain you extra gauges and measurements, but the basic function (that is, telling the time) is not improved upon in a way that reflects the extra premium.

However, the design is, of course, a significant area of difference between cheap and more expensive watches, as is quality of material- and this is indeed a more significant reason why people buy expensive watches. They are more likely to look good, and the quality is likely to be such that they last for a much longer time. This allows, in many cases, for watches to be passed on as family heirlooms, as items passed down through generations.

The Six Million Dollar Patek Phillippe
And that long-term aspect brings me onto a significant economic reason for buying an expensive watch. Expensive watches are arguably very strong investments to make; if they are kept safe and maintained well enough, their price can rise exponentially over time as they become rarer and more cherished. The world's most expensive watch was a vintage Patek Philippe- sold in 2010 for almost $6m, kept since the 1940s. Investment is where expensive watches are necessary- firstly a cheaper watch, even if it is 100 years old, is unlikely to have much visual or brand appeal, and secondly it would be far less likely to be in working order after a long period of time. Expensive watches, integrated with various precious metals and crystals to keep it durable, are thus far more likely to be appreciating assets.

This brings me to the $17000 Apple Watch Edition. Here are just a couple of reasons why you may want to buy it, and my opinion why you'd be mad to:

1) The looks. Not only do you want the latest Apple device on your wrist, but the most expensive and shiny one. You overlook the fact that the actual software, function and quality of timekeeping of your watch you spent thousands on is pretty much identical to the $350 base Apple Watch, and not so different from a cheaper smart watch either. Not $17k different, anyway.

2) Investment. Though a more credible reason than just simply wanting to show off, you'd have to use it pretty conservatively to keep it maintained for a significant time enough for it to appreciate. Being a used luxury product it is likely to steeply depreciate for the first few years, after which numerous iterations of the Apple Watch are likely to have been released and yours will be running far from perfectly (anyone who owns an Apple product more than 3 years old will know this). Vintage watches are usually running as they were when new- but being a battery operated, software-running device, it is unlikely that there will be much interest in a laggy 20 year old Apple Watch, if it even still works. Too much modification to the watch (new batteries, hardware) will be likely to remove the original 'vintage' appeal of the watch and thus fail to increase its value, if anything decrease it.

3) You are an Apple fan with genuinely too much spare money to spend, and you buy it knowing you're gonna buy the next Apple Watch when it comes out anyway. If so, good for you mate.

Of course, this isn't to say you shouldn't buy an Apple Watch Edition or an Apple Watch generally. If you have the money and the interest in the product, go ahead, as I'm certain many people will. The functionality and competence of the watch against its smartwatch competitors would be unquestionable, Apple is likely to be at the forefront of this new technology with companies like Pebble, Samsung and Motorola.

But it would be wrong to treat it as a 'traditional' clockwork watch. It seems unlikely that it will be anywhere near as effective in appreciating over time. It appears the watch is evolving as we speak- we are indeed entering the new generation of timepiece, for better or for worse.


RECOMMENDED READS

Apple Watch: Timekeeping https://www.apple.com/uk/watch/timekeeping/

Why Watches Are A Timely Investment http://www.thisismoney.co.uk/money/investing/article-2631408/Why-watches-timely-investment-100-years-First-World-War.html

Top 5 Best Investment Luxury Watches http://acl90210.com/best-investment-luxury-watches/

Is A Rolex A Good Investment? http://www.borro.com/uk/borro-blog/is-a-rolex-watch-a-good-investment
Lone Editor

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