Mobile phones are a volume driven mass business. The companies don’t have fat margins but make money by selling a large number of sets. However, Nokia has a luxury subsidiary that creates sets for the super rich where the numbers are small but the margins are big. Unfortunately the gadget sellers are so volume oriented in their mindset that they don’t understand the nuances of the luxury market. Similar is the case with Vertu, the luxury arm of Nokia. They have several sets encrusted with gemstones but don’t have the appeal of the contemporary luxury designs or products.
Their most recent release is a touch screen Symbian set which is aimed to counter the LG Prada which has received a positive response from the consumers. The tag line for the promotions of the new set is ‘pinnacle of mobile phone excellence worldwide,’ but Nokia seems to be way behind in the race. It would not be an exaggeration to call the set obsolete. The pace of growth and evolution in the R&D driven technology is so fast that you have to be much quicker than what Nokia is today just to keep pace with the market.
Today the class aspirants are also well aware of the power and intrinsic value of new technology. Nokia must realize that covering the phones with gemstones is not the solution unless the new phone is ahead of the others in terms of features and technology. Otherwise it will make more sense to get a gold case for a standard iPhone. Vertu, however has been able to price its products at the highest the market can bear. Their data cable is priced at $190. A standard lithium-ion battery is priced at $90 and the handset themselves cost $790. They also have cases that they sell for $1,300.