Apple ‘Underpricing’ Strategy for AirPods, Apple Watch: Analyst | Fortune


Apple has long been viewed as a “luxury” device maker with high prices. But now one analyst believes the company is changing its tack.

The tech company has engaged in an “underpricing” strategy with its AirPods wireless earbuds and Apple Watch smartwatch, Above Avalon analyst Neil Cybart said this week. He believes Apple’s AirPods, which are available for $159, are notably more affordable than some of their competitors, including Motorola’s $249 VerveOnes+ headphones. Cybart added that the Apple Watch’s entry-level pricing of $269 is substantially cheaper than alternatives like the Fossil Fenix 5 and Samsung Gear S3, which cost $599 and $350, respectively.

“AirPods and Apple Watch pricing demonstrate how Apple is looking to own not only the premium segment of the wearables market, but rather the entire market,” Cybart wrote on Above Avalon. “As Apple runs deeper into luxury, the company is reducing entry-level pricing. This is a curious development as one assumes the opposite would have occurred—Apple would keep prices high to maintain a certain level of exclusivity or scarcity.”

Apple’s (AAPL, +0.82%) pricing on most of its hardware products has been a subject of debate for years. Apple itself believes its high-priced items—like the iPhone or its most expensive Mac, the Mac Pro—deliver enough value to justify their price tags. Some analysts and critics, however, say Apple is charging too much. They add that customers are forced to pay an “Apple Tax” to get its products.

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Apple ‘Underpricing’ Strategy for AirPods, Apple Watch: Analyst |