I'm not sure if I missed "dumb" or it was edited in shortly afterward, but either way that's comparing apples and oranges.
Compared to the existing precedent of smart watch prices, Apple's watch is $100 more expensive than the next highest priced model. This is, of course, what Apple does with all of their hardware, but whether it's unsurprising or not it's still a factual and relevant point to make.
The basic Pebble is $150. The premium Pebble Steel is $250. The Apple Watch starts at $350; you can bet that the premium models will be well north of that.
Most "dumb" watches that cost over $350 will retain the majority of their value well past those 5 years, too. Apple's first generation watch will be ~$50 in 5 years.
The first Samsung Gear watch was only announced a year ago (Sep. 2013), and you can get it for <$150 new. Pretty sure it will be well under $50 for that model in 4 years.
A $500 watch will certainly still have much use 10+ years from purchase.
It might have minor scratches but that's it.
A smart watch will probably not even power on 5 years from purchase (due to bad battery); or be able to pair with your phone (new phone OS might not be backwards compatible).
With the notable exception of the first iPhone not having a subsidy price for a month or two Apple products don't tend to drop in price much year to year.
They've had the $199/$299/$399 price structure for the newest iPhones for more than 6 years.
This is true fashion oriented technology in the same vein as Beats headphones. If it becomes a fashion statement to wear it, people will buy one at $350. Probably not many HN readers though.