Platinum luxury phones have 'no competition'
Published: 22 Mar 2002 13:09 GMT
The intense rivalry in the mobile industry has prompted Nokia to look for alternative hunting grounds. Although its foray into the world of high fashion is fraught with challenges and uncertainties, the market leader retains its customary poise.
Vertu, Nokia's luxury phone subsidiary, was formally unveiled this January in the capital of haute couture, Paris. The launch capped four years of pondering and two years of preparation.
"In 1995, Frank Nuovo, the chief designer of Nokia, had an idea that mobile communication devices would one day be available not just in the mass market, but also in the luxury market. That idea was discussed and talked about for several years," said Vertu President Nigel Litchfield.
"Just over two years ago, we secretly set up a company to (really) see if there was a business case," he told CNET Asia in a recent interview. Having discovered a "strong demand" for luxury phones, that company became Vertu.
Since its launch, Vertu has been holding exclusive parties around the world for "select" groups of people such as businessmen, artists, and politicians, said Litchfield. Those interested in a Vertu product are invited for private viewing at the company's client suites located in New York, Los Angeles, Paris, Singapore and Hong Kong. In addition, the London-based company will set up two product galleries in the second half of this year, he said, adding that more details will be provided at a later date.
Each handcrafted phone, adorned with precious metals, can cost between 24,000 euros (£15,000) for a platinum piece and 6,000 euros (£3,700) for one made of stainless steel.
Litchfield, who referred to Vertu's products as "instruments", discussed at length the superior materials used in their making.
"Underneath each of these keys is a ruby bearing. The customer can press these keys over five million times and still get the same consistent, positive response. If you take an ordinary mobile phone, once you get beyond half a million keypresses, you will start to find some problems," he said.
He compared Vertu's products with various fashion devices such as luxury watches. But while jewelry is timeless, mobile phones face the issue of expiring technology.
Vertu handsets will thus come with internal technology that can be upgraded without replacing its valuable outer shell, a feature analysts believe will be key to the company's success.
Vertu's first products, to be released in mid-2002, will feature monochrome displays, polyphonic ringing tones and Short Messaging Service (SMS) capability.
Colour-screen upgrades will subsequently be available in the second half, while General Packet Radio Services (GPRS) upgrades will arrive next year, Litchfield revealed.
The lack of cutting-edge features such as Bluetooth should not bother Vertu's potential customers, he said, adding that the potential Vertu customer understands technology but does not necessarily expect the latest functionality.
Instead, the quality of materials used is very important to Vertu's target audience.
"These are people who buy the best quality watches, the best quality fashion devices," said Litchfield. Some of them own several mobile phones, he added.
Other than the inherent value of the product, Vertu will be relying on the promise of personalised sales attention and quality service to ensnare the market. For instance, a special key on the side of the phone allows users to contact Vertu's operators for specialised information on travel and entertainment.
With Vertu's launch coming off a miserable 2001 for the wireless industry, Litchfield saw fit to draw encouragement from his past experiences. He previously served as senior vice president of Nokia Mobile Phones Asia-Pacific, based in Singapore, where he was responsible for the overall management of strategic and operational issues.
"I came to Nokia in 1996, and almost immediately, we were faced with an economic crisis in 1997. Many of our competitors pulled out of key markets and started disinvesting. But Nokia actually invested more money in the brand, and we think that has actually paid off," he said.
"One of the lessons I learnt was not to look at the next year, or what is happening in one market at any one particular time. It's the long-term vision of where the products need to sit," he added.
When asked about the market size for Vertu phones, Litchfield conceded that the potential remains unknown. But he quickly added that Vertu's success is in its own hands.
"I can't give you a (market) figure because nobody knows," he said. "That's one of the exciting things -- we are creating a new market. The market size will be determined by the sorts of products and services that Vertu offers because we don't believe we have any real competition today," he added.
However, Litchfield believes that challenges will eventually come, from rivals old and new.
"There are two ways we could face competition. One is from the mobile phone industry. It's taken us two years to get to this point. Therefore if the competition does come, I hope they do it with the same sort of quality. The worst thing to do would be for the mobile phone manufacturer to sit down and say, 'Vertu is very successful. Let's take one of our existing phones and encase it in platinum and gold,'" said Litchfield. "That would, in a sense, not be the right thing. It would ruin this market."
"The competition could also come from the luxury goods industry. Then again, making communications devices is much more complex in terms of technology than making a watch, a belt, a handbag or jewelry. I'm not saying it's easy to make those products, but we have a unique offering," he said.
Two months since Vertu's public inauguration, the company president -- himself barely three weeks into the job -- remains supremely confident.
"We understand communications technology. We believe now that we understand the luxury industry. It will take something for competition to match that."
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