Can Apple Compete With Luxury Brands?

There's no question that Apple Inc.'s AAPL latest offering, the smartwatch, has been met with a high degree of anticipation and excitement. The device, set to go on sale April 24 in nine countries, carries a hefty price tag; but some say the company has been overly ambitious in its projections for just how much people are willing to pay.

Major Price Discrepancy

The cheapest watch will cost $350, but the most expensive model, the Apple Watch Edition, will run $17,000. At first glance, the staggering difference in price suggests that the Apple Watch Edition will be vastly more useful than a basic model; however, it seems the major difference between the two are the materials used and the strap design.

All of Apple's smartwatches will have exactly the same inner workings and functionality, leading many to wonder if the tech superpower has made a mistake.

Related Link: Expert: Why Apple Watch Will Be Company's Most Upgradeable Product

What's On The Inside That Counts

While the Apple Watch Edition will feature 18 karat yellow or rose gold cases, there is little more to set it apart from cheaper models. This may be troubling for many investors who believe that luxury products, especially watches, need to set themselves apart from those designed for the masses in a quantifiable way.

Luxury car brands like Maserati boast attractive designs and quality materials as well as top-of-the-line engine components. If the only thing differentiating the Italian sports car from a Ford Fiesta was a fancier paint job, it may not have become quite so sought after.

Over Estimated?

There are people out there who are willing to shell out $17,000 for the highest model, but the question is how many? The Wall Street Journal reported that Apple is expecting exceptionally high demand for the luxury watch models in China and plans to produce one million models per month beginning in the second quarter. This estimate may be far-fetched considering the watch's price tag.

The Bottom Line

Apple's foray into the luxury market may not prove to be overly beneficial to the company's profits. However, that doesn't mean the watch is doomed. Many are expecting mid-range and basic models to sell well as the general public has expressed a genuine interest in wearable technology in the months leading up to the Apple Watch release.