Corporate News
A new Apple Watch is displayed at the Apple Store on June 17, 2015 in San Francisco, California. PHOTO | FILE | AFP
By JULIA LOVE
In Summary
Nearly 20 per cent of Apple Watch buyers are not only
shelling out hundreds of dollars for the timepiece but are springing
for a spare band too, giving the tech giant a profitable second dip into
customers' wallets, according to data provided exclusively to Reuters.
The data from Slice Intelligence, a research firm that mines
e-mail receipts, offers a rare window into the money-making potential
of Apple's first brand-new product under CEO Tim Cook.
The ever-secretive company has yet to release how
many units of the watch it has sold, let alone how profitable it is.
Slice estimates the company has sold 2.79 million as of mid-June.
But if the band purchases are any indication, sales of the watch itself are just the beginning of Apple's profits.
Although the entry-level sports band retails for
$49, it costs only about $2.05 to make, according to an analysis of the
38-millimeter size by IHS, a technology research firm.
The estimates do not include expenses such as
packaging and shipping and may not capture the full cost of the material
Apple uses to make the band, said analyst Kevin Keller of IHS.
With the watch, Apple has put a high-tech spin on
the razor-blade business model, in which a company sells a product for a
modest price and then profits from sales of accessories, he said.
"Of course, because it's Apple, it's sell the razor, sell the blade," Keller joked.
Slice studies e-mail receipts from a panel of 2
million people representative of online shoppers in the United States,
more than 20,000 of whom bought an Apple Watch. Data from Slice, which
analysed only bands made and sold by Apple, showed about 17 per cent of
shoppers purchased more than one band.
Slice says its data lines up closely with information from the Department of Commerce as well as Amazon sales data.
The black sport band is the most popular choice for both the band that comes with device and extras ordered by consumers.
But the $149 Milanese loop is the second-most
popular second band, suggesting many consumers are pairing a practical
sport band with a more luxurious option to make the watch more
versatile, said Kanishka Agarwal, Slice's chief data officer.
"People are trying to get two watches in one," he said.
The entry-level Apple Watch sport model – which
starts at $349 – has been the most popular among early shoppers,
according to data from Slice. But an extra band – which fetches as much
as $149 for the quilted leather loop and $449 for the stainless steel
link bracelet – can raise the cost considerably.
The popularity of spare bands suggests some consumers may be spending more on the Apple Watch than they intended
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