Kirk Kerkorian's daughter must have one

Sherry Listgarten sherry@timesten.com
Tue, 22 Jan 2002 09:46:37 -0800


A platinum, sapphire crystal, and Rolls Royce leather cell phone, with a
chime that sounds like an orchestra... For a mere $21K. Nokia's new line of
business(!)

>From the WSJ (http://interactive.wsj.com/articles/SB1011635280242240840.htm)

Nokia Unit Targets Wealthy Customers
With a Line of Luxury Mobile Phones

By ALMAR LATOUR 
Staff Reporter of THE WALL STREET JOURNAL

LONDON -- Silence may be golden, but chatting on a mobile phone can be
platinum.
Thanks to Nokia Corp.'s new luxury-phone subsidiary, Vertu Ltd., the world's
rich and famous will soon be able to call their friends and colleagues from
handsets encased in platinum, white or yellow gold or stainless steel.

The new handcrafted devices feature a sapphire crystal face, sides covered
with the same leather that is used on Rolls-Royce seats, and a black ceramic
back. The phone also has a 16-tone Yamaha speaker that allows for a ringing
tune that sounds like an orchestra.

At the product's launch event in Paris Monday night, Vertu disclosed the
initial pricing for five models. Limited editions of a platinum handset will
go for about 24,000 euros (more than $21,000), while white gold, yellow gold
and two stainless-steel models will go for about 6,000 euros apiece. The
handsets can be ordered starting next month -- and all do have to be
ordered, since each is handmade.

The phones will be sold by invitation only in private retail boutiques on
expensive shopping streets in Paris, London, New York, Singapore and Hong
Kong, among other locations. (The New York boutique will open in
mid-February, Vertu said.) The phones will even come with a system to pamper
users: A special "concierge" button on the phone links the users to a
service that can book tickets to plays or reserve a restaurant table.

"This is not a phone," says Vertu's chief designer, Frank Nuovo, who has
been developing the product for four years while heading up Nokia's design
activities. "It's about much more. It's an experience."

Even as mobile-phone sales are shrinking, the dominant cellphone maker still
sees room for growth in niche areas. Global handset sales are believed to
have declined for the first time in history last year. Nokia said in
November that it expected the industry to ship only 380 million handsets in
2001 compared with about 400 million the year before. For 2002, Nokia is
forecasting industry shipments of between 420 million and 440 million
phones, but it may revise that estimate when it releases its fourth-quarter
earnings Thursday.

Separately, Morgan Stanley Monday downgraded its rating on Nokia to
"underperform" from "neutral." The news sent Nokia shares in Helsinki down
5.9% to 23.96 euros ($21.19).

Nokia's move into the luxury sphere highlights the telecom-equipment
industry's shift toward branding. Increasingly, mobile-phone makers are
trying to avoid depending solely on telecom operators to sell their phones,
but build up their own ties with consumers.

Whether Nokia will find much demand for its new luxury phone is unclear. The
luxury-goods market is in one of its worst downturns in years, with consumer
demand for pricey baubles down sharply since Sept. 11, particularly in the
crucial U.S. market. Indeed, with the U.S. market down as much as 25% since
Sept. 11 for some luxury-goods powerhouses, practically all the big players
have announced profit warnings for 2001, and none hazard a guess as to this
year's performance. Most groups say they have yet to see any signs of an
upturn and many executives privately concede that they are writing off the
first half, hoping for a recovery starting in the autumn.

Many luxury-goods groups, including Rome-based jeweler Bulgari SpA, have put
off product launches or scaled them down for next year, figuring it is
better to wait for consumer interest to return. So some analysts think it is
a bit odd Nokia would go forward with a product that is so over the top.

"If it's purely a luxury good, one would say the timing is interesting,"
says Anne Bahr-Thompson, a branding expert at Interbrand in London. "But I
think it will be more than that. Vertu is divorcing itself from Nokia and
its technology in a way. It's making a promise that it's something new. That
has high potential."

Telecom analysts say there are probably buyers for the new Vertu phone, but
note that trying to bring a mobile-phone brand to the level of a luxury
brand such as Prada or Hermes may be costly. Few expect Vertu to be a big
moneymaker for Nokia; the payoff, they say, would come from being associated
with other luxury brands.

Vertu officials think they know where to find their target customers. A
preopening visit to its retail outlet in London, on Old Bond Street, reveals
a store in an unmarked suite on the second floor of a retail building. To
enter, one has to ring a doorbell and be buzzed in, much as at many other
luxury stores in the same area. Upstairs, there is a bare, gallery-like room
with white walls, three black leather seats and several display cabinets.

"At a later point we will open stores with showrooms," says Vertu's
public-relations chief, Danielle Keighery.

-- Deborah Ball in Milan and David Pringle in London contributed to this
article.
Write to Almar Latour at almar.latour@wsj.com