Apple Watch duo not ticking same boxes on luxury

Apple’s launch of its Watch on Monday showed a subtle but detectable difference in tone between Tim Cook, its chief executive, and Jonathan Ive, its head of design. The contrast went beyond the variance in how the two men – one American, the other British – term the metal that encases the cheapest version of the Watch.

In the lead-up to the launch, there was a great deal of talk about Apple's newfound closeness to the fashion and luxury industries, symbolised by the top-of-the-range $10,000 gold Watch Edition. That was a theme of interviews given by Sir Jonathan to luxury magazines, including How To Spend It of the Financial Times.

But Mr Cook’s presentation placed far more weight on the cheaper versions of the watch, ranging from $349 to $1,099, and their practical functions, including taxi-hailing and messaging applications. Although he mentioned the Edition’s “jaw-droppingly beautiful 18-carat gold”, he devoted little time to it.

Two videos

Apple’s presentation included two videos on metallurgy narrated in Sir Jonathan’s soothing voice. One was on the anodised aluminium (or aluminum) used in the Sport watch, the other on the steel (“no ordinary stainless steel”) used for the mid-level version. Apple’s video on its new, extra hard, gold alloy did not feature.

Meanwhile, the only fashion figure to appear in the presentation was Christy Turlington Burns, the Calvin Klein model who was there to promote her maternal health campaign with a video of her running the Kilimanjaro half-marathon wearing a Watch. It emphasised utility and social worth, rather than glamour.

This felt like the classic Apple, a premium rather than a luxury company, reasserting itself. It also felt wise. Heading upmarket into competing with Patek Philippe in the small highly profitable market for luxury watches would not play to Apple’s traditional strengths, nor sell enough devices.

In terms of pricing, Apple Watch is unusual. Although many companies, including Apple, offer basic and premium versions of their products, none that I know of offers a luxury model that is 49 times the price of the basic (the top Watch Edition models cost $17,000). That is an enormous stretch, given that they are identical inside.

The BMW 3 Series, for example, ranges in price in the US from $32,950 for the 320i to $50,150 for the ActiveHybrid 3: the top model is about 1.5 times the price of the basic. The span of Apple’s Watch reaches from a $349 watch to something priced on a par with a $20,000 Patek Philippe Calatrava.

Products such as Patek Philippe watches sell on the basis that they are unique items that will retain their value. Patek’s advertising emphasises that its watches can be handed from generation to generation. In contrast, Apple steadily upgrades most of its products, with older versions falling in value.

That does not mean Apple will fail to sell the luxury version of its Watch. There are enough people who will want to display the most expensive one on their wrist, just as they carry a Louis Vuitton bag, that makes it a nice sideline to the main business of selling millions of Watches.

Luxury market

It was no coincidence that Apple started its presentation with a video of its store in Hangzhou, designed by Foster & Partners, nor that Mr Cook emphasised its plans to have 40 stores in China, a strong luxury market, by mid-2016. Angela Ahrendts, the former chief executive of Burberry, is in charge of its stores.

But while Sir Jonathan, interviewed in his Bentley Mulsanne for an article in the New Yorker, evidently loves the high quality and physical craftsmanship of luxury goods, Mr Cook is not steering Apple too far in that direction. Not to judge by how he presented the Watch, anyway. john.gapper@ft.com

– Copyright The Financial Times Limited 2015