Apple mines big profits from Watch band

SAN FRANSISCO: Nearly 20 per cent of Apple Watch buyers are not only shelling out hundreds of dollars for the timepiece but are springing for a spare band too, giving the tech giant a profitable second dip into customers’ wallets, according to data provided exclusively to Reuters. The data from Slice Intelligence, a research firm that mines e-mail receipts, offers a rare window into the money-making potential of Apple’s first brand-new product under CEO Tim Cook.

The ever-secretive company has yet to release how many units of the watch it has sold, let alone how profitable it is. Slice

estimates the company has sold 2.79 million as of mid-June. But if the band purchases are any indication, sales of the watch itself are just the beginning of Apple’s profits.

Although the entry-level sports band retails for USD 49, it costs only about USD 2.05 to make, according to an analysis of the

38-millimetre size by IHS, a technology research firm.

Slice studies e-mail receipts from a panel of two million people representative of online shoppers in the United States, more than 20,000 of whom bought an Apple Watch. Data from Slice, which analysed only bands made and sold by Apple, showed about 17 per cent of shoppers purchased more than one band. The popularity of spare bands suggests some consumers may be spending more on the Apple Watch than they intended.

“It’s just a psychological thing,” said Carolina Milanesi, chief of research and head of US business at Kantar Worldpanel ComTech, a consumer research firm. “I start with the least investment, and then I spend more money, but I get something else.”

Apple has opened the door, creating a platform for third-party developers to design bands of their own. Apple will not share in the revenue from sales of those bands, according to a person with knowledge of the matter. If bands designed by outsiders take off, that may make a dent in sales of Apple’s own accessories. But having a stylish array of bands to enhance the appeal of the watch is most important, experts say – the extra revenue for Apple is just a fringe benefit.