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How smart is Apple’s attempt to woo the rich?
Smart wearable devices are becoming increasingly popular but has Apple’s
watch missed the mark
Mon, Mar 16, 2015, 01:45 Updated: Mon, Mar 16, 2015, 16:22
Davin O'Dwyer
Tim Cook, Apple’s CEO, speaks about the Apple Watch. Photograph: Jim
Wilson/The New York Times
Tim Cook, Apple’s CEO, speaks about the Apple Watch. Photograph: Jim
Wilson/The New York Times
It is a rule of consumer technology that prices fall: what starts as an
unfeasibly expensive gizmo eventually becomes affordable and
accessible. The textbook example of recent decades is the mobile phone.
Not long ago mobiles were the preserve of the obnoxiously rich, eager
to signal their affluence, but gradually became so ubiquitous they now
outnumber humans.
Belying that downward price pattern is no easy feat, which is what
makes Vertu one of the oddest and most fascinating mobile phone
companies.
The English-based company was started in the late 1990s by Nokia after
its chief designer, an American named Frank Nuovo, determined that
there was a lucrative market in mobiles for the extremely rich. They
launched their first phone, or “communications instrument” as they
liked to call it, at the Museum of Modern Art in Paris in 2002, with an
attention-grabbing price of $7,549 (€7,111). “I wanted to take
something as unlikely as a communications technology and present it as
art,” said Nuovo at the time.
But far from being art, the Signature was a gaudily blinged-up version
of a Nokia, and the entire Vertu concept seemed like an exercise in
satire, an elaborate joke at the expense of rich fools. The most
expensive “Platinum Diamond” model cost $35,275 for goodness sake.
When dumb phones were rendered obsolete by smartphones five years
later, it seemed like the Vertu strategy was up – surely no one would
fork out $15,000 for a technically limited handset when $500 could get
you an iPhone? Right?
Well, it seems there really are enough people who value status
signalling more than having the best device available, because Vertu
has managed to survive, sold by Nokia a few years ago and now offering
insanely expensive handcrafted Android smartphones starting at $10,300,
including models featuring lizard- and alligator-skin backings.
Truly, Vertu’s success in extracting cash from the rich can only be
explained by seeing the phones as a “Veblen good”, a commodity “whose
demand is proportional to their price”, according to Wikipedia. Crudely
put, the appeal is directly linked to how expensive it is.
And the rise of these sorts of goods has to be seen through the prism
of record wealth inequality, a technological by-product of
Piketty-isation, so to speak.
The growing wealth of the global top 1 per cent has led to huge demand
for “luxury” goods that serve merely to signal one’s membership of the
top 1 per cent. Which brings us to the Apple Watch, remarkable for
being arguably less interesting as a piece of groundbreaking technology
than for its pricing strategy, from $349 for the aluminium Sport
version to north of $17,000 for the most thoroughly blinged-up gold
version.
Extensive interviews
As part of Apple’s pre-release press blitz, the company’s normally
reclusive chief designer Jony Ive gave not one but two extensive
interviews.
In the first, a fascinating, extremely long profile by Ian Parker in
the New Yorker, it was made clear that Ive was the primary architect
not just of the itself, but of the device’s positioning as a luxury
gadget for the super-rich, convincing chief executive Tim Cook to
overcome “concerns about creating a divide between wealthy and less
wealthy customers”.
Incidentally, Parker tellingly revealed that Ive was “very interested”
in Vertu, according to a former colleague.
The second interview, with the Financial Times, was less revelatory,
but what was perhaps most interesting was the interview’s placement –
in the How to Spend It magazine, the rather vulgar FT supplement that
revels in conspicuous consumption.
Then came the Apple Watch launch event itself, which spent about as
much time purring over the luxuriousness of the materials as it did
explaining the watch’s practical utility. Such an emphasis, of course,
is critical if the company wants to convince potential high-end
consumers that they are getting a status symbol worthy of their bank
balances.
With the Apple Watch, Cook and Ive have set themselves an extremely
challenging pair of tasks: convince people that a smartwatch is
something they might want and find useful; and price it along a
spectrum ranging from relatively affordable to spectacularly
unaffordable.
At this point, it is extremely difficult to determine whether Apple
will be successful with these two challenges in the short to medium
term.
Wearable technology
In the first instance, the wrist is obviously the right place for
wearable technology - that’s what even the most basic watches are,
after all. As the technology improves and the price falls, expect to
see smart devices of some make or other on most of our wrists in the
next decade, and don’t rule out the day when wrist-borne devices
supplant the smartphone as our primary personal computing device.
However, whether it will be Apple Watches on those wrists remains to be
seen. Initial reports suggesting that the user interface is
uncharacteristically confusing don’t augur well, and there’s every
chance another company will refine the template set by Apple and other
current rivals.
On the second challenge, it will be fascinating to see how
simultaneously targeting the mainstream and luxury markets will affect
perceptions about both the device and the Apple brand.
It’s instructive to note that with Vertu, Nokia took the precaution of
releasing jaw-droppingly expensive equivalents of their basic phones
under an entirely different brand, whereas Apple just released
jaw-droppingly expensive equivalents of their basic watch at the very
same event.
It would take more than the usual dose of Steve Jobs’s famous “reality
distortion field” to overcome the cognitive dissonance that comes from
seeing the same device being presented as both a mainstream gadget and
a Veblen good. That incongruity offers an unavoidable implication about
how Apple is positioning itself to exploit the world’s widening wealth
inequality.
* Topics:
* Davin O Dwyer
* Frank Nuovo
* Ian Parker
* Steve Jobs
* Tim Cook
* Apple
* Nokia
* Vertu
* Département de Ville-de-Paris
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