LUXURY EXPERT: It doesn't matter whether Americans hate gold Apple Watches - China will go nuts for them

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Scott Galloway

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Scott Galloway.

I confess I have been skeptical that people who really care about exclusive luxury brands will really shell out $10,000 or $20,000 for gold Apple Watches.

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After all, part of the prestige of luxury is knowing that what you buy - and then wear or drive or live in or sit on or look at - is clearly different than the stuff the poor lowly plebes buy.

But the case of the Apple Watch, the poor lowly plebes will be able to buy the same Apple Watch that you'll be forking over $10,000 for - for $9,651 less.

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Yes, yours will be dipped in gold, but so what. It's still the same Apple Watch.

I've also wondered why anyone would voluntarily shell out $10,000 for a gadget that will be obsolete in a year. It's bad enough shelling out $199 or $349 for a gadget that will be obsolete in a year, let alone $10,000.

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Apple stalwarts assure me that Apple would never be so greedy as to charge $10,000 for a gadget that will be obsolete in a year - and that, therefore, Apple will probably upgrade the guts of the Watch for free or something.

But what if Apple changes the hardware design? Will Apple upgrade that for free, too?

Anyway...

I was skeptical enough about the prospects for high-end Apple Watches that I reached out to one of the world's leading luxury experts, Scott Galloway of L2, and asked him about it.

Galloway told me not to worry.

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Even if Americans and Europeans prove unwilling to shell out $10,000 for gold Apple Watches that are the same as $349 Apple Watches and will go stale in a year, Galloway implied, China will go hog wild for them.

Here's Galloway:

* The high-end model they should call the "China" watch as it's clearly targeted at emerging markets, aspirational (see above: China) consumers who are looking to spread their feathers (flaunt their individualism and wealth) with what has become the ultimate self-expressive benefit brand: Apple.

* This pricing rubric could re-define the construct of a luxury brand's product assortment (premium version at 15x cost of basic). However, Apple is continually re-writing the rules of business (e.g., remember "core competence?" Apple has half a dozen core competence(s)).

* In my view, key to being able to charge this type of price (long-term) will be if the design has casing that is not perishable (software can be swapped out/replaced). Key to luxury brand price point is the illusion that it is a "store of value." You can, supposedly, when desperate sell your Patek watch or DeBeers engagement ring to pay your rent. The big question, is whether the design allows Apple to be the first tech company and defy gravity (i.e., not have their product diminish in value over time).

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So, on that last point, at least, even the luxury experts agree:

For the high-end Apple Watches to be successful, at least outside of China, Apple will have to be willing to upgrade them as new models come out. Because you can't "store value" in a useless consumer electronic gadget.

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