Apple Watch's success may lie in spare bands: report
Teardown shows greater than 2,000% mark-up for straps
The profitability of Apple's Watch may not lie solely in unit sales, as one in five buyers of Cupertino's wrist-wear are opting to purchase a spare strap for their device, Reuters reported.
According to estimates from email-mining research firm Slice Intelligence, Apple's first new product category under CEO Tim Cook has sold 2.79m units as of mid-June. Apple itself has yet to disclose unit shipments or sales figures.
Slice analysed e-mail receipts from a sample of 2m typical US online consumers. More than 20,000 of the sample bought an Apple Watch and around 17% of them purchased more than one band.
The Apple Watch comes in 38 models: 10 for Watch Sport, 20 for Watch and eight for Watch Edition. The straps for each carry considerable mark-up. According to teardown specialist IHS, the band for the 38mm Sport model costs just $2.05 to make, but sells for $49, representing a 2,290% margin. However, IHS admitted that its analysis included bill of materials only, which may not be complete, and did not take into account packaging or shipping costs.
IHS analyst Kevin Keller compared the sale of the Watch to the business model for the shaving products industry, where one product is sold at a relatively low price and the manufacturer profits from the sale of consumable components or accessories.
"Of course, because it's Apple, it's sell the razor, sell the blade," Keller said.