[jeanjogr]

More than make the price reasonable, I would wager it was to anchor the Apple Watch in the "watch" category, rather than the "electronic gadget" category in people's mind. It's not some $XXX toy for notifications and whatever. Much like watches, it is as much about functionality as it about style. Much like watches, it both exists in a expensive, luxury form and in an everyday form. You're buying a Swatch, with Rolex available if you want - not a fitibit.

[jiveturkey]

on top of that, they created their own gold alloy for it. One that allowed them to use less gold at the same karat weight! For that, you paid a premium. Genius.

[sneak]

The melt value of the gold was well under $3000, for a $17000 watch. Even it it had been solid 24k 99.9 fine (I believe it was 14k gold), it would have been a small fraction of the cost, and a low volume item to boot. I doubt the custom alloy contributed significantly to their margin.

IIRC most gold watches are 12-14k for durability.