Adding up all the costs certainly increases the sticker shock, but that's the wrong way to think about it. The Phone is a sunk cost. They question is whether Apple can get an iPhone user to spend $300 for added functionality. Of course, that depends on the functionality, but the people who would consider doing so are the ones that could afford to spend $500 on a phone. Those people are MORE likely to buy a smartwatch, not less.
Initially, most iWatch sales will be to consumers who already own an iPhone. But over time, they will be to consumers who are considering them as a package purchase, especially versus competitors. In other words, the mindset for those who are interested in a smartwatch accessory for their phone will think, "I can buy an Android-based phone and watch set for $600 or I can buy and Apple-based on for $1,100". That's a huge difference. Now, if Apple can make the package cost $750 together *and* give it a performance edge, it would be a very different story. |
