Nokia launches luxury mobile phone company

Paul de Bendern

HELSINKI: The world's first luxury mobile phone company was launched by Nokia

on Monday, offering hand-crafted cellular phones, adorned with gold or platinum,

and costing twice the price of a typical family car.

Vertu Ltd., a new independently run subsidiary of Nokia, will start selling

its phone range at its stores in some of the most exclusive shopping areas in

the United States, Europe and Asia by mid-2002, the company said.

The first devices, costing a staggering 24,000 euros ($21,240), will be cased

in platinum, display a sapphire crystal glass screen and offer a sound as clear

as a Mozart symphony, Vertu said in connection with the company's launch in

Paris during the fashion show week.

The heart of the phone -- the technology that allows users to make and

receive calls, use calendars, contact books and games -- will be specially

designed for its super-rich customers. Nokia, the world's largest mobile phone

maker, hopes the Vertu brand will create a new segment in the high-profit luxury

goods market at a time when mobile phone sales are slowing after years of

runaway growth.

"We're taking a huge leap forward here," Vertu chief designer Frank

Nuovo told Reuters in a telephone interview.

"We're beginning from a blank slate to create this entire company...

We're lifting all restrictions," said Nuovo, who is credited with turning

Nokia's phone designs into the most competitive in the industry. He will keep

his position at Nokia.

The new London-based company, which has secretly been in the works for more

than five years, will be funded by Nokia but will have its own management team

and over 200 staff worldwide. Vertu will focus on customers who are willing to

pay a premium to own something many would want but few can have, just as the

watch, clothes, or car industries have done.

While Nokia's closest rivals have for years produced limited editions of

expensive phones or built custom-made ones, Vertu takes it a step further by

redesigning the inside of the phone as well, analysts said.

The seriously wealthy have so far been able to buy phones adorned with gold

and black diamond from Motorola or cased in gold from Ericsson, which have been

particularly popular with oil sheiks in the Middle East.

Unique phones



While the Vertu phones will be built on Nokia's technology and some of its
parts, Vertu will assemble and customize the technology to suit its clients. It

will also add exclusive parts, like high-quality antennae, microphones and

displays and produce casings made out of precious metals.

"You have to think from the inside out. This is not an aesthetic

covering of an existing product," Nuovo said. Vertu's internal technology

can be updated without having to change the casing -- something that should easy

those worrying about the short life cycle of technology.

Vertu phones, some of which will cost less than 24,000 euros and some more,

will work on the popular GSM (Global System for Mobile Communications) standard.

Analysts had worried that the rich would not want to splash out thousands of

dollars on something that would be outdated in a matter of a few years.

"Sure, there's a market for this, but how big it will be is unclear.

Volumes will probably be tiny, while margins will be stratospheric," said

Lehman Brothers analyst Stuart Jeffrey. "The fact that they can be upgraded

is key." Vertu said the components have been specially crafted in

partnership with the world's most prestigious manufacturers.

While the first set of products would only be offered in casings of platinum,

18 carat white and yellow gold, and stainless steel, future models could also be

made out of other materials and possibly be adorned with precious stones. Vertu

said something that will appeal to the international jet-setter will be the

Vertu Concierge service.

A special key on the side of the phone will allow clients to connect to a

team of operators who have, for example, specialized travel and entertainment

information, and offer assistance in major cities around the world -- much like

a network of fine hotels.

(C) Reuters Limited.