Apple has long been viewed as a “luxury” device maker with high prices. Now, however, a new report from Above Avalon posits that the company is changing its tactics.
This “underpricing” is an effort by the company to make its various products more accessible to new consumers through lower price points, analyst Neil Cybart of Above Avalon wrote in a March 15 research note. The two underpriced products that Cybart focused on in his article are the Apple Watch and Apple’s AirPods wireless Bluetooth headphones.
“In just ten years, we have moved from the ‘Apple Tax’ days, when Apple was accused of pricing products artificially high, to apple products being priced below the competition,” Cybart wrote. “Apple is using its balance sheet and scale to grab new users, and in the process, redefine luxury.”
Concerning Apple’s AirPods, except for the Bragi Headphones (which cost $149 USD), the author noted that all other competitions were more expensive than the AirPods’ $159 USD price tag ($219 CAD in Canada). The next option would be the Samsung Gear IconX at $199 USD while everything else was priced over $200 USD.
The analyst believes that this was Apple’s attempt at forcing its competitors to compete better with the wireless headphones they offered by reducing their prices. But even with these discounted prices, Apple’s AirPods were still far cheaper than their competition.
The same underpricing strategy being applied on the Apple Watch Series 1 models. At its current $269 USD price, it is already among the lowest-priced smartwatches available in the market. Even the Apple Watch Series 2 is another suitable option with a price of $349 USD. Its biggest competition price-wise is the Fossil Q Founder, which sells for $275 USD; and the Samsung Gear S3, which sells at the same price as the Apple Watch Series 2.
With this kind of pricing strategy for the Apple Watch and AirPods, which he even thinks could get as low as $199 for the former, Cybart believes that Cupertino wants to capture not just the high-end market, but rather, the entire wearable market as a whole.
This strategy will certainly change the meaning of tech luxury as we know if Apple continues to offer premium devices at lower prices. With this strategy, it could be tough for other companies to compete with Apple in the wearables market.