Piper Jaffray’s Gene Munster on Apple Watch pricing, sales

When it comes to Apple High-Definition Smart TVs, Piper Jaffray analyst Gene Munster has been consistently wrong. As a result of his cracked crystal ball, Munster has become a bit of an in-joke among Apple bloggers, although his financial analysis of Apple is often quite accurate. Today StreetInsider.com featured Munster’s look at the pricing, gross margins, and sales of the various models of the Apple Watch, and his predictions bear repeating.

First, Munster believes that despite the expected Apple Watch Sport base model pricing of $349, the average selling price (ASP) of the Sport will be closer to $450 based on “potentially different case and storage options.” I’m not exactly sure what he’s referring to in terms of case options, as the case design — as seen on the Apple Watch web pages — is pretty well defined in one of two sizes: 38mm and 42mm. Likewise, there’s been no word on what the storage capacity of the Apple Watch will be and if there will even be a choice of capacities.

Munster believes the mid-level Apple Watch will “start at $499-549 and likely carry an overall ASP closer to $650,” while the “Apple Watch Edition will start at $4,999 and potentially have a segment ASP of closer to $7,500 factoring in higher end bands.” Looking at the three watch models, Munster thinks the Sport will account for about 55% of units sold, while the Watch will account for about 45%. That leaves a very narrow amount — close to 0% — for the high-end Edition watches, which he predicts may sell only 10,000 units out of a total 8 million Watches sold. 

That would make the luxury segment of the Apple Watch market at just 2% of the total market for Rolex watches, which Munster believes “is a reasonable potential first year size as high-end consumers with the power of the Apple brand vs. other luxury watches and the trade-off of quickly depreciating technology in an Apple Watch vs. other more traditional luxury watches that may hold value better.”

One comment from Munster that I agree wholeheartedly with is that the interchangeable bands will be promoted heavily by Apple and could add anywhere from $25-50 to the average selling price of the Watch. 

We’ll keep this post in mind in the future as “claim chowder” to see just how right – or wrong – this one Wall Street analyst was on his Apple Watch forecasts.