The Anti-iPod

When the iPod came out it was obvious to everyone: the iPod was more useful than anything else that was available at the time. Back in the day when you saw someone carry around an iPod you knew why she was carrying around that iPod: she loves her music and wants her entire music collection with her everywhere she goes. Anyone who loves music understood that.

Andrew HunzekerHesed:

My week and a half wearing an apple watch has taught me one big lesson about watches. A watch is only secondarily used to tell time. Upon realizing this Apple’s whole advertising strategy around the watch suddenly made sense. The Apple Watch is not about utility, it is about the materials that make it up and the people who care about those materials. Watches are actually social signifiers more than time pieces, fitness trackers, or notification screens, they communicate the wealth and status of the wearer.

HunzekerHesed is on to something. Why would Apple keep everything the same from the US$349 Sport to the $12,000 Edition, except for the materials used to make the case and the crystal?

Apple makes tons of money, by selling memory chips on its iPhones. Let me explain, the 16GB iPhone 6 is $199, the 64GB iPhone 6 is $100 extra at $299, and the 128GB iPhone 6 is $100 more on top of that for a grand total of $399. Everything else is the same; only the amount of memory storage changes. To get an extra 48GB Apple charges $100; to get an extra 112GB (48GB+64GB) Apple charges $200. To say Apple charges a premium is a terrific understatement.

Most will agree Samsung makes the most reliable and highest performance memory chips in the world. Apple seems to think so and uses a lot of Samsung memory chips, so I will use Samsung memory chip prices as examples. The 64GB PRO, a class 10 micro SDXC card with a 90MB/s data transfer rate is Samsung’s best 64GB micro SD card. And that costs about $50. Apple charges $100 for an extra 48GB. The 128GB version is about $100; Apple charges double that ($200) for less (112GB).

The profit margins! And this is how I think Apple makes most of its profits, by buying memory chips at a really good price and then selling them at an insanely great price. Samsung wants to make money too, and is following suit with its micro SD card-less Galaxy S6 design.

How will Apple make most of its money with its Apple Watch? This time it isn’t memory, but materials: aluminum, stainless steel, and gold. Or to be more precise, Apple’s concocted version of aluminum, stainless steel, and gold. Samsung should follow Apple and make aluminum, stainless steel, and gold versions of its smartwatch, if it wants to make gobs of money.

So, what do you think when someone is wearing an Apple Watch? Why is he wearing an Apple Watch, especially the more expensive stainless steel version or the ludicrously more expensive gold version?