The Apple Watch Is A Luxury Item, And That's How Apple Will Make It A Success (AAPL)

Steve Kovach

A $349 gadget that needs your $649 other gadget to work. It looks good. It comes in so many variations — including one with a body made out of 18-karat gold — that few people will own the same version. 

That's the new Apple Watch, which is starting to sound more like a luxury item than an essential gadget. And I suspect that's exactly how the device will be seen at first when it launches early next year.

First, there's the price. It starts at $349, but that's for the base model. The Apple Watch will likely cost a lot more if you choose extras like leather bands and premium case materials. I can't imagine the solid gold version costing less than $1,000. I wouldn't be surprised if it even went for $5,000. To put that in perspective, other smartwatches from Samsung, LG, and Motorola don't cost more than $250. (However, those watches aren't very good.)

Then there's the functionality. Apple isn't finished with the Watch, so we only got a limited demonstration of what it can do. But most of what I saw yesterday largely mimicked the iPhone's features: mapping, chatting, notifications from apps like Facebook, and so on. The Apple Watch today serves as a mini version of the iPhone already in your pocket. That'll give many people very little reason to shell out $349 or more for something that does essentially the same stuff as the iPhone.

(The exception, of course, will be the fitness-tracking features like the heart rate and exercise monitors. The iPhone can't do that. And as app developers get more time to create stuff for the Apple Watch, I imagine it'll become a lot more useful.)

Finally, there was something different about the way Apple showed the watch off for the first time. In the demo area following Tuesday's announcement, I was flanked by will.i.am and Gwen Stefani. Angela Ahrendts, the former Burberry CEO and new Apple VP in charge of retail, wasn't far away. I saw Paul Deneve, former CEO of French fashion house YSL and now a VP in charge of special projects at Apple, chatting with VIP guests. And those are just two recent executive hires by CEO Tim Cook that show Apple is pivoting into a luxury brand.

Will the Apple Watch be a massive hit on the scale of the iPhone? No way. The iPad wasn't, either, but it was and still is wildly successful. (And there's more coming.) The iPhone was a once-in-a-generation smash hit, one that Apple continues to feed off of by building offshoot products and services.

The Apple Watch is our first taste of that under Cook.

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SEE ALSO: Photos of the Apple Watch