Personal Finance

Apple, Inc. Quietly Kills the Golden Apple Watch

Apple Watch Edition Hero
Apple Watch Edition Hero

Say goodbye to the gold Apple Watch Edition. Image source: Apple.

At Apple 's(NASDAQ: AAPL) product event yesterday, the company focused primarily on just two products: the iPhone 7 and the Apple Watch Series 2. While the iPhone was the clear headliner, the opening act was notable in what was missing. The new Series 2 of the Apple Watch Edition now features a white ceramic case, while the original gold case is no more.

The shift from gold to ceramic is telling, as it suggests that Apple's efforts to sell smartwatches that cost $10,000 (or more) have been relatively unsuccessful. The new ceramic model starts at $1,249 -- about the price of a new Mac -- and Apple says it is four times as hard as stainless steel. That's a pretty big change in pricing strategy. Presumably, the market for $10,000 smartwatches that become technologically outdated in short order is pretty small.

Say hello to the ceramic Apple Watch Edition Series 2. Image source: Apple.

Originally, I thought the high price point of the Edition would offset low unit volumes, not that Apple has ever shared detailed financial results around its nascent smartwatch business. The most obvious impact is that average selling prices will decline, but Apple will also modestly reduce its exposure to the volatile price of gold . Incidentally, Apple recovered approximately $40 million worth of gold through its recycling program last year.

You can think of the original gold Edition as an experiment, testing the waters of high fashion. It took quite a bit of courage even to try such an ambitious pricing strategy, and no other original equipment manufacturer attempted to go quite as high.

The move to ceramic will probably be well received, as it rationalizes the product line in a compelling way, particularly as Series 2 includes various other performance improvements. But that was always the rub. People know that tech gadgets depreciate quickly as performance gets better with new versions, and $10,000 is a lot to ask for a product that you know will suffer such a fate.

A secret billion-dollar stock opportunity

The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple.

Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More