Huawei Watch Price: A Lesson in Context
Rumors have emerged that the highly anticipated Huawei watch will cost somewhere around $1000. While many people referred to this as unreasonable for a smart watch, this may actually not be the case, once you realize just what you would be getting for your money. Further reports have stated that the device will come in several variations: the first costing $370 and coming with a black or silver finish and a stainless steel band. The second variant will cost $424 and feature a gold-colored finish and a leather strap. It is the final model that is said to cost $1000 and Huawei has stated this variant will come encased in three ounces of 24 karat gold. That is where problems start to appear, as this is simply not possible.
The math behind this is quite simple:
The price of gold today in china is 7237.15 Yuan (1155.25 USD) per ounce,
The apparent three ounce of gold contained in the watch would therefore cost 21711.45 Yuan (3465.74 USD),
Bloomberg in a discussion on smart watches state that an expected gross margin for a watch is 60%,
With the cheapest Huawei Watch model being $370 that would make costs $148,
Without knowing the cost differences of production we will assume a similarity for argument’s sake,
The final cost therefore for a gold Huawei watch is to be in the region of 3613.74 USD,
Adding back in the gross margin we could expect a retail price of 9034.35 USD.
The nearest comparative product by price is the 38mm Apple Watch Edition which will retail at $10,000 and contain just under two ounces of gold, this gold however is 18 karat which a clever patent from apple confirms will actually only contain half the gold found in standard 24 karat gold (the science behind this can be found here). Both devices will also come with sapphire displays. You are getting significantly more for your money from the Huawei device based on these figures.
For those of us seeking a similar gold style on an Android Wear device for a much lower price, the popular Moto 360 is available in a champagne gold finish but for the much more justifiable price of just $329.99. The device does not actually contain gold, but it certainly gives an impressive look.
The cheaper Huawei Watches fall in to the same price range as the Samsung Gear S and the Apple Watch Sport (42mm), but for this price you get the benefit of a metal or leather band as opposed to the plastic sports band with the other brands. For just $25 more than the Apple Watch sport, you also get yourself gold plating.
Huawei already has a strong following in China which just so happens to be the current largest consumer of gold in the world, with 10 million people in the country buying a gram of gold each month. Therefore if Huawei introduce this device well, they could sell more than many people would think possible of such an expensive and niche purchase, whilst at the same time increasing their smartphone market share through increasing worldwide brand recognition.
Without knowing far more details about the device and its makeup, there are many things we can only speculate about at this time. No one but Huawei at the moment will know what their plans and strategies are for this watch and we could all benefit from remembering this until we hear from them. Gold is a lot more expensive than many people realize and from what we know so far this contains a lot.