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Apple’s Watch Strategy Could Already Be In Trouble Says Experts

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According to new research from Consumer Intelligence Research Partners Apple’s distribution strategy for the Apple Watch is going to slow it down “significantly”.

Currently the Apple Watch can only be pre-ordered via Apple.com or through the Apple Store app.

And for those who are really keen consumers can try on the watch in some Apple stores this week, but they will only be able to purchase them online through the initial launch period. 

The smart watch will also be available at four boutique retailers around the world but none in Australia. 

CIRP claims that the limited distribution strategy will hinder initial sales for the Watch. Even Apple partners such as JB Hi Fi or Harvey Norman are not going to get access to the new watch range. 

 “With only 265 US stores (453 worldwide) only so many units can pass through a given location each day. A significant percentage of consumers – even iPhone owners – do not live near an Apple Store.” Apple Stores accounted for just 12 percent of all iPhone sales in 2014, according to CIRP, while mobile phone carrier stores such as Telstra Optus and Vodafone sold almost two-thirds.   

CIRP claims that Apple will test the device in their own retail network and if demand is there they will start selling them via the likes of JB Hi Fi or Dick Smith.

Apple.com has listed shipping as four to six weeks for some models, and as far out as June for others. 

The stylish watch range includes the ability to track your heart-rate, use ApplePay, view text/email messages and take calls Dick Tracy-style by speaking into your wrist (so long as the Watch is linked to a nearby iPhone). 

This product launch is unusual for Apple because it is offering a wide range of styles via a combination of options: two types of Watch case sizes (38mm, 42mm), three different Watch cases (stainless steel, aluminium, 18 karat gold), and a variety of Watch bands.

That wide range of options results in a wide range of prices. The Watch of which there are 20 models available in Australia will cost from $$799 (aluminium case, rubber band) to $17,000 (18 karat gold case, leather band with brass buckle).

Several reviewers have rated the Watch an A for ambition and a D for pricing strategy.

The Harvard Review said that the first problem is the issue of upgrades. Apple has long been criticized for the way its frequent updates result in planned obsolescence.
 It’s expected that Apple will release improved Watches in the near future, just as it does for its smartphones. 

(A new iPhone version is typically released every September). So forget about the top-of-the-line $17,000 version – why spend even $3,000 today for an everyday wearable that will look outdated and be functionally inferior in a year or so? It doesn’t make sense. In contrast to the advertising tagline for Patek Phillipe (“You never really own a Patek Phillipe, you merely look after it for the next generation”), consumers who buy a Watch are choosing a very expensive disposable timepiece.

Second, in contrast with smartphones, mobile phone carriers aren’t subsidizing or providing monthly payment plans to make owning the latest technology financially accessible. If consumers had to pay the unsubsidized cost of an iPhone 6, most would be very slow to upgrade. The lack of subsidies on the Watch will make – or at least should make – consumers even more anxious about the cost of upgrades.

Third, the price range is extremely wide – in fact, it’s too wide, and that’s a big mistake. It’s rare for one brand to serve such a wide spectrum of customers – in the Watch’s case, $799 (somewhat accessible) to $17,000 (garishly expensive). Timex, for instance, targets the lower price range in the watch market while Rolex serves the high end.

The downside of this wide price range, from a brand perspective, is further complicated by the technology component of the Watch. When consumers see prices ranging up to $17,000, they tend to psychologically believe they’ll have to spend somewhere around the midpoint (say, $8,000) to get a “good one” (from a technology standpoint). 

The reality is the Watch’s technical performance is the same no matter what the price – the price differential is based on the various metals and adornments – -but this truth is obfuscated by the wide price range.