I was visiting Miami last week, and several times during the trip, I swerved my head around to gawk at a super high-end luxury car. (During one morning jog in Miami’s ritzy Coconut Grove neighborhood alone, I saw two Maseratis, a Rolls Royce Wraith, and a Lamborghini Aventador—maybe a million dollars worth of steel and glass in total.)
We’re all familiar with this sensation: of seeing a car or a yacht or a mansion that is so expensive, so completely out of our financial realm, that it’s almost like seeing a UFO. Who is this person, we think, and how did they get so goddamn rich?
These moments can be great if you’re a lifestyle voyeur, or depressing if you’re the jealous type, or rage-making if you’re a fan of higher tax rates on the rich. But they’re emotional experiences regardless of your stance. They’re moments at which the enormous fortunes of a select few come into stark contrast with our own economic realities. When we see these ultra-luxury goods, we know that there is a VIP room of life, and we know that we’re not invited, and may never be.
There are going to be lots of interesting things to watch for in today’s Apple Watch announcement. There will be implications for security, for healthcare, for fashion, for developers, for new forms of communication. It’s one of the most purely mysterious products Apple has ever released. But the question everyone is asking is: how high will Apple go? We know that Apple is planning to release several tiers of the Apple Watch, starting at $349 for a Sport model with a rubberized watch band, and going as high, perhaps, as high as $10,000 or $20,000 for an 18-karat gold Edition model.
As Apple Watch obsessive Jon Gruber notes, this tiered pricing model is a historic change for Apple:
This is without question new territory for Apple. They’ve never sold products with the same computing internals at different pricing tiers based solely on the luxuriousness of the materials.
For years, there has been class anxiety in the smartphone world, but it's been largely felt by Android users, whose devices have come to connote a lower socioeconomic status than iPhones. (Apple has fed into this, for example, by refusing to allow Android text messages to share the iMessage's blue color.) But there was no such division within Apple's customer base. Once you cleared the iPhone hurdle, you were in the VIP room, same as everyone else. Sure, some garish billionaire might equip his iPhone with a $3.5 million diamond-encrusted case. But the rest of us had the same, standard-issue devices. (The exception was the iPhone 5C, which failed in part because it made its users feel second-class.)
Well, iPhone users: welcome to the world of gadget-based class anxiety. Today's Apple Watch announcements will introduce devices you can't afford, with features you'll never be able to get.
Gruber predicts a “vociferous backlash” to today’s Apple Watch pricing announcements, especially if the middle-tier model, which has a steel band, is priced significantly higher than the entry-level Sport model. “Most people have wrapped their heads around the fact that the gold Edition models are going to cost at least $5,000, and so have already written off Apple Watch Edition as something for the wealthy luxury market,” he writes. “But the steel Apple Watch, that’s something that most people still look at as for them. And so they expect the starting price to be around $500, and the various leather and metal band options to cost $100-300 more.” Gruber thinks, rightly, that people who have been Apple customers for years will feel like they should be able to afford a middle-tier Apple Watch. And if it turns out that they can’t, some serious bourgeoisie angst might ensue.
Being an Apple customer has never been a cheap proposition, of course. But until now, Apple products weren’t true luxuries. Hundreds of millions of middle-class people around the world sprung for an iPhone or an iPad, even if it meant stretching their household budgets. As a result of their ubiquity, having an Apple device in America didn’t mean much, except that you had some amount of disposable income and identified culturally with the company.
This iPhone's leveling effect produced an incredibly profound vision of social equivalence. An Uber driver in San Francisco could have the exact same smartphone as Mark Zuckerberg. (And, amazingly, he had a better smartphone than the President of the United States, who was still stuck using a BlackBerry.) The tech billionaire may have had a more expensive data plan than the Uber driver, or more storage on the device, but those things were invisible. To the outside observer, there was no difference between them.
But at a price tag of, say, $15,000 for the top-tier Apple Watch, there will be no middle-class stretching. Edition watches will be unaffordable except by the wealthy, and thus, they'll become true status objects. Venture capitalists will wear them to impress their investors. Saudi princes and Chinese tycoons will buy them by the dozen. Hipsters in Brooklyn will show up to parties sporting them, to the great surprise of their friends. (They’ll make excuses—“Christmas present!”—but the friends will know the truth: trust fund.) As I wrote last month, income inequality is widening, and it makes sense for Apple to aim products at the ultra-rich, who can afford to pay significantly more for a premium product. But this economic reality could usher in a cultural shift. Finally, having the best Apple device will mean something within Apple-world.
Perhaps this new tiered pricing scheme won’t change much, in the grand scheme of things. After all, it’s not like the world’s wealthy do a scrupulous job of hiding their wealth now. They buy yachts, private jets, and Central Park-facing condos. They dress in Brioni suits and summer in the Hamptons. It's possible that the Apple Watch will be just one more visible indicator of status, in a world already filled with them.
But it does represent a change of heart for Apple. The company has always marketed its products as aspirational—the gadgets of choice for the young, well-off, and urbane—but the products themselves have been aimed squarely at the upper end of the middle-market. An ultra-expensive watch would mean that Apple sells products that are simply out of reach, even for the most dedicated Apple fans. (Hell, it would mean that Apple sold products that are out of reach for Apple employees.)
It’s possible that the mere presence of $10,000 or $15,000 Apple Watches on the street of major cities across America will be a psychological disturbance to people who are stuck wearing their $349 Sport editions. It’s also possible that, as they say in marketing, these customers will feel distanced from the brand, in a way that comes back to bite Apple down the road.
Regardless of the fallout, Apple is shifting gears today, and announcing its arrival as a true luxury company. Pay attention to the language of high-end commerce creeping into the keynote beside all the “magicals” and “intuitives.” And listen closely when the price of the top-end Apple Watch is announced. The gasp you hear will be thousands of people who used to conceive of themselves as equals, suddenly feeling very poor.