CHICAGO TRIBUNE – In the mid-80s, cellular phones were a dubious status symbol. They were costly to use and as unwieldy as cinder blocks, which made them impractical for most people.
But the novelty of having one drew attention.
Today, however, there are more than 140 million wireless phone subscribers in the U.S., and economies of scale have turned the cell phone into a common household tool.
Yet for those who appreciated the early phone’s exclusivity, the current crop of plastic-clad handsets is big on utility but low on prestige.
Now some mobile phone-makers seek to regain exclusivity with a new line of high-end phones.
“People who wear custom-tailored suits and drive Rolls-Royces were tired of pulling a cheap plastic phone out of their pockets,” said Nigel Litchfield, chief executive of Vertu, a luxury phone company spun off from Nokia last year. “There have been a lot of requests for something nicer than what was being offered.”
With prices comparable to midsize sedans, several ounces of precious metal and a sleek design, Vertu is looking to establish its phones to have the same cachet as Rolex and Prada. The company has already attracted the discerning patronage of some celebrities, including actress Gwyneth Paltrow and pop divas Madonna and Jennifer Lopez.
The initial response to Vertu’s phones has been strong, Litchfield said. He declined to release sales figures but said Vertu’s first 18 months of operation have exceeded Nokia’s original projections. The phones’ retail prices range from $5,700 to $21,000.
Yet some analysts question whether the U.K.-based company is aiming too high.
Ren Zamora, a telecom analyst at Loop Capital Markets, acknowledges that Nokia has struck on a viable market. But he believes that Vertu will, overall, have a negligible impact financially.
“It is a limited market,” he said. “You won’t be seeing Motorola rushing into this new market anytime soon.”
Peter Aloumanis, a vice president at Schaumburg’s Motorola Inc., said the No. 2 cell phone maker has no plans to enter the “hyperluxury” niche.
Still, Motorola has been offering pricier handsets since 2001 that are sold in upscale department stores such as Bloomingdale’s. Their limited edition Bobby Jones and Baby Phat lines are two of a number of different series that retail for about $549.
Motorola has kept the production numbers low–typically under 1,000 units–to increase their appeal. And despite the higher price point, most of the handsets have sold out.
“They fall a couple of notches below Vertu,” Aloumanis said. “We were looking to appeal to thousands of users as opposed to hundreds, as is the case with Vertu phones.”
Motorola has also found that this moderate-priced upscale approach appeals to overseas buyers as well. In China, which is the world’s fastest growing market for cell phones, domestic upstart TCL International started offering a faux-diamond handset that was viewed with derision by foreign competitors. But TCL’s success has prompted Motorola to offer its own faux-diamond editions.
Vertu says the high price for its phones is justified considering how they were built. The phones do not roll off an assembly line and are not based on modifying an existing phone.
Sony Ericsson, for example, has offered a special-order-only luxury option, but it is mostly cosmetic. The work is done by European partners who adorn handsets with 18-carat gold and precious gems.
Austrian jeweler Peter Aloisson offers similar options for Motorola and Nokia handsets, which start at $24,000.
According to Vertu, the company wanted to recapture the appeal of old world craftsmanship that draws people to luxury items like Patek Philippe watches. The handsets–or instruments, as Vertu likes to call them–have over 400 parts, which are hand assembled.
The Vertu phones include features like jeweled bearings under each key; 18-carat gold, platinum or stainless steel options; and scratch-resistant sapphire crystal faces.
The phones can be upgraded, an important feature considering how quickly cellular technology advances.
Besides the high-quality phone, Vertu emphasizes customer service. Its one-touch concierge service provides personal assistants–available 24 hours a day–to set appointments and reservations, buy tickets and even plan events.
According to Vertu, most of its buyers subscribe and many use the concierge service several times a month. The typical user is a frequent traveler who wants the full service away from the home or office.
“The range of what we can offer is potentially unlimited,” Litchfield said. “We once had a stranded yacht owner who called us to help him find a new mast after his broke.”
Vertu phones are available at high-end stores throughout Europe, parts of Asia Pacific and at U.S. specialty stores and retailers like Barneys and Neiman Marcus. Starting this month, Vertu will also be sold at Saks Fifth Avenue.
Initially the phones were sold by appointment only at special suites, a service still available for celebrities or other high- profile clients seeking discretion, said Vertu spokeswoman Erin Hawker.
“We also have customers who buy several phones,” Hawker said. “They use one and hold onto the other for future collectors value.”
Peter Shemomsky, director of fine jewelry and timepieces at the Bonham and Butterfield auction house, doubts the phones will have much collectible value beyond the worth of the precious materials they are made of. Especially when the phones become obsolete.
“The value of the Vertu is heavily tied to its function,” he said. “A Rolex watch will always tell time, even as newer watches are being released that may do it better.”
On the other hand, Katherine Williamson, Bonham’s celebrity memorabilia expert, believes used Vertu phones may at least hold their retail value if they can be tied to celebrity owners who have enough staying power to be remembered 20 years from now. “Madonna probably, but J-Lo I kind of doubt,” she said.