Apple Watch "Edition" Will Cost At Least $5,000, Probably A Lot More

Apple tends to make a decent profit on its devices. It's quite well known that the Bill of Materials for the iPhone (known as the BoM) is a fraction of what it charges. Various analysts suggest that it makes about 50-70% profit on its phone. That profit is less on new products, for example when the iPad was introduced, it was making far less in clear profit. The Apple Watch, on the other hand, has got people thinking.

In particular, a man called Greg Koenig has had a think about what material costs are involved in the production of the gold Watch Edition are, and the results are somewhat startling. For a start, he estimates that there is 29.16g of gold in the frame. At today's market value that's about $1200 in gold alone. Apple may pay less, and as someone pointed out they may have a team of people buying gold when the value is lowest in a given trading period.

Even so, when you add in the cost of the electronics and the sapphire screen it's quite unlikely that the Watch Edition will cost Apple less than $1500 to make. That means it's going to be looking for a healthy return on that. For one thing, this gold version is a niche product, so the production costs will be higher as demand will be lower. Apple has also - it says - made the gold on its watch twice as hard as "regular" gold. All of this points to a hefty eventual price point.

Koenig says in a follow-up tweet to his predicted gold content "If anyone thinks Apple is charging less than $5k for the Edition, they are smoking crack. Based on the gold content alone, $5k easy". It is quite important that Apple gets the pricing right on the Watch Edition though, because reducing it later would be a really bad move from a perception point-of-view. I suspect that Apple will want to come in under $10,000 but at significantly more than $5,000. So my estimate is $8,000.

There have also been reports that the company is beefing up security at its stores in preparation for the Watch Edition's arrival. That's a clear indication that there is going to be a lot of high-value merchandise on display in its stores, much of that coming from the gold Watch Edition. Indeed, one story on 9to5mac suggests that Apple is intending to weigh the watch should anyone return it, to make sure no gold has been removed.

The biggest problem Apple has though is that everyone knows that first-edition Apple devices are not, as a rule, a wise investment. There have already been countless reports that the Watch has scaled back fitness support, and that's a great shame because fitness tracking is something Android Wear just doesn't get right at all. Those reports make me think that the first version of the Watch will be a water-testing exercise, and the second iteration will be far more impressive.

That said, go and have a look on eBay at home much good condition, first generation iPhones go for, it's a surprisingly large sum of money. So anyone who does stump up the thousands of dollars Apple will ask for the Watch Edition shouldn't see their investment fall too much. The only concern would be for the built-in battery, and the replacement of that.

Even so, the Apple Watch is for gadget people far more than for watch people. Someone who loves watches would happily pay this sort of money for a Rolex or Omega. They would almost certainly not be interested in a device that needs an iPhone to operate.

The one market that will be interested this watch though? Rappers. If 50 Cent isn't seen wearing a Watch Edition within a month of launch, I'll eat my hat. For one thing, I know he's an iPhone user, as I saw him with his at CES this year.

As a matter of interest, the BoM on the iPhone 6 is around $200. For that sort of money Apple might as well give the phone away with every Watch Edition purchase.

I'd love to hear your comments on this, what do you think it will cost, and will you be buying the Edition?

EDIT: Some people are telling me that because of the mix used to toughen the gold, the actual value of the raw metal would be around $850. I don't think that changes the ultimate retail price, but I remain interested to hear your thoughts. This is a premium product, but will people pay this sort of premium for it, or is my guess way off?