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Nokia targets rich with luxury mobile phone range

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Nokia said on Friday it plans to launch a new range of hand-crafted mobile telephones, some adorned with precious stones, as the world`s largest mobile phone maker steps up efforts to tap the luxury goods market.

A new Nokia subsidiary, called Vertu, will start operations later this month to produce status-symbol mobiles and other personal communications devices for the seriously rich.

"Details and additional information, products, etc will remain confidential for now," said Nokia Mobile Phones spokesman Tapio Hedman.

The move comes at a time that mobile phone makers are looking to find new growth areas as sales stall in saturated markets following several years of runaway growth.

Nokia`s rivals have for years produced limited editions of expensive phones or built custom-made ones.

A few years ago Sweden`s Ericsson made gold-plated phones for several customers in the Middle East. US wireless company Motorola has added gold and black and white diamond elements to its phones, popular with oil sheiks, and works with the Dubai agent of luxury jeweller Tiffany & Co.

The only luxury phone Nokia produces is a gold version of the tiny 8850 fashion phone for the Asian Pacific market.

The new division is a marked shift by Nokia, which makes one in three of all phones sold globally and has built its brand through its strong designs, user-friendly phones and ability to adapt quickly to consumer demand.

"It is a way for Nokia to differentiate its product range further as part of its ongoing brand strategy," said Ben Wood, senior mobile communications analyst of research group Gartner.

Nokia shares, trading up 2.2% at 26.54 euros in a firm afternoon market, were largely unaffected by the news.

Vertu`s chief designer is believed to be Frank Nuovo, credited with turning Nokia`s mobile phone designs into the most competitive in the industry. He is also expected to stay on as chief designer of Nokia, the Finnish company.

New brand name

Nokia is expected to offer the devices under the Vertu brand. Vertu will have a separate management and be an independent subsidiary based in London, according to people close to the company.

Vertu will focus on wealthy people -- most probably in the Middle East and Asia where demand for these products are high -- willing to pay a premium for a device that is exclusive or limited, like the watch and car industries have done.

Industry experts say there is clearly a market for premium phones as a mobile phone is no longer a pure communications device but also a fashion statement for many.

"People are willing to pay a premium for this, just like they are for exclusive watches," Wood said.

But analysts said it was unclear if there was a big enough consumer base for these products, particularly as the technological shift was quite fast and a device costing $4 000 may be technologically outdated in a matter of months.

On Vertu`s Web site http://www.vertu.com, the company said it would soon come out with the "finest in personal communications... combining craftsmanship, design, technology, service. A perfect object in both form and function."

Vertu will start small with some 200 staff and has already contracted jewellers and craftsmen to make the devices, according to people close to the company.

Some analysts suggested Nokia may be planning to co-brand the phones with luxury goods makers such as Cartier, Patek Philippe or Rolex.

But the sale of diamond-and-gold-encased devices may be a cause for worry as mobile phone-related crimes are on the rise, particularly in Britain where a young woman was recently shot in a mobile phone robbery.

Related Reuters stories:
Nokia to launch small colour phone

Reuters News Service

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