The Apple Watch bet

It is on.

Kirk McElhearn wrote up his take on the pricing of the Apple Watch line here.

The Apple Watch Edition is not a luxury watch; it’s just a gold-cased version of the cheaper watch. There’s nothing exclusive about it, nothing special. It’s not like more expensive watches where you pay for complex machinery. Yes, there is gold; that will make it more expensive than the other models. But not that much. Estimates of the cost of the gold suggest that the metal would cost less than $1,000.

As such, I think the list price for the base model Apple Watch Edition will be $1,999. There will certainly be a price differential by size, and it could be a couple hundred dollars for this version. In addition, the watchbands will cost as much as several hundred dollars. There’s just no reason to pay more. I repeat, this is not a luxury watch; this is a smartwatch with a gold case.

My predictions are here.

The consensus seems to be that the high end iPhone 6 costs about $247 to make, including parts and labor. Without a contract, that same iPhone 6 sells for $849. That’s a price/cost ratio of about 3.44 (the price of the phone is a bit more than 3 times the cost).

Apply that same model to the Apple Watch, and you get a price ranging from $3,400 to $6,800.

The terms of the bet? Kirk wins if the price of the highest end Apple Watch Edition is US$2500 or less. One penny more than that and I win.

The stakes? If I win, Kirk sends me a large packet of digestive biscuits from the UK. If he wins, I send him this.

Get ready to pay up, Kirk!