Wow! That's quite a statement. One has to wonder about the veracity of such a headline. Let's do a little digging.
The article linked in another thread -
http://www.mining.com/apple-buying-...watch-14071/ They site online articles from the WSJ
http://blogs.wsj.com/digits/2015/02...initial-run/ and
http://tidbits.com/article/15443 TidBITS, an Apple "news" blog. It basically boils down to:
If Apple were to produce 1,000,000 of its top of the line solid gold watch per month, using 2 troy ounces of gold per they will need ~746 metric tons of the shiny stuff a year. Apparently that's about 1/3 of the current world's production.
Wow! This is almost unbelievable!
Turns out the 2 troy ounces may be rather high as the originator of this estimate, Apple Spotlight;
https://applespotlight.com/2015/02/...apple-watch/ has since down sized their current estimate to ~29.16g of 18k gold. So the guess as to how much gold has gone from ~62g of 24k gold to 21.87g. OK, I can buy that Apple will make a product with a relatively large amount of gold in it as the current rumor as to how much they'll charge for it is $5,000 - $10,000.
The second part of the equation is the one I have the biggest problem with. Do I believe that Apple can sell 1,000,000 watches a MONTH for $5,000 - $10,000 each? This seems absurd to me. So, where does this number come from?
The Wall Street Journal
Quote:
Apple has asked its suppliers in Asia to make a combined five to six million units of its three Apple Watch models during the first quarter ahead of the product's release in April, according to people familiar with the matter.
Half of the first-quarter production order is earmarked for the entry-level Apple Watch Sport model, while the mid-tier Apple Watch is expected to account for one-third of output, one of these people said.
Orders for Apple Watch Edition - the high-end model featuring 18-karat gold casing - are relatively small in the first quarter but Apple plans to start producing more than one million units per month in the second quarter, the person said. Analysts expect demand for the high-end watches to be strong in China where Apple's sales are booming.
So if Apple is making 5 - 6 million units leading up to release, with 80% being the lower two models; and plan to produce 1M gold watches a month, the total production will be 5 million a month starting in April (assuming gold stays 20% of production). Of a product that starts at $350 at the bottom and $5,000 - $10,000 for the Apple Watch Edition at the top.
I don't see it. If Apple could move a total of 1,000,000 units a month I'd be shocked. But let's assume they can, let's also assume the expensive one still sells at 20% of total units shipped.
29.16g of 18k gold (.703 oz)
X 200,000
= 140,600 troy ounces
Or 4.373 metric tons
Still a lot of gold to be sure; but a far cry from 1/3 the world's gold production. Who knows though, I'm no expert. Maybe Apple can sell 12,000,000 >$5,000 watches a year. I wouldn't bet on it though.
Seems more plausible that the WSJ misquoted their source or are the victim of poor editing. Time will tell.
Posted 02/28/2015 05:39 am
$5K or $10K on a watch that will become obsolete in a couple of years and won't appreciate in value. Will I be able to pass this down to my heirs?
