Jewel-encrusted gadgets are standard equipment for a certain kind of wealthy celebrity. Supermodel Naomi Campbell allegedly threw her glittering BlackBerry at a maid earlier this year. And Paris Hilton frequently poses for pictures with the latest pricey gizmos.
But now the everyday wealthy — or those who aspire to join their ranks — can get their hands on gilded, bejeweled luxury electronics.
After all, it's one thing to own a Motorola Razr — when the phone came out in 2004, it had a $500 price tag, and now Motorola has sold 50 million of the sleek phones, which Verizon Wireless offers for $70. But it's another thing to own a $600 golden Dolce & Gabbana fashion Razr handset, which went on sale in July.
The Razr paved the way for Nokia to sell its $900 8800 slider phone, adorned with glass that Nokia says is "used in luxury timepieces."
"It wouldn't be too ridiculous to say some of these phones are for the rapper girlfriend and heiress demographic," says Current Analysis analyst Avi Greengart. "But there's definitely a broader market too — the margins in this space are huge, and it's a growing category."
The fact that Nokia's luxury phone subsidiary, Vertu, has stayed in business for four years and expanded its product line is proof that the luxury phone market is gaining steam and succeeding, says Greengart. While Nokia doesn't break out revenue for Vertu, the company says its sales and units shipped tripled from the first quarter of 2005 to the first quarter of 2006. The $5,700 Ascent pink leather edition is the company's top seller, accounting for 30% of all Vertu units sold.
There's some rhyme and reason to a preposterously expensive phone. The impulse that propels someone to pay for a blinged-out handset is the same one behind a $2.50 purchase of a Madonna ringtone — consumers see phones as form of personal expression.
But some consumers will drop dollars on any kind of high-end gadget. Affluent consumers purchased luxury electronics more frequently than any other luxury home product category during the past four years, according to Pam Danziger, president of luxury goods consultancy Unity Marketing. These consumers spent an average of $8,641 on electronics in 2005.
And while some luxury electronics appear to be nothing more than a marketing ploy — for example, LG Electronics' $130,000 gold-plated plasma TV won't move many units, but the company will get mileage out of show-stopping displays at stores like London's Harrods —consumers appear to have a fondness for electronics that fall outside the boundaries of slate-gray plastic.
About 70 percent of consumers think materials like wood, precious metals and leather make electronics more appealing, according to a survey by Russell Research.
But the reality, says Danziger, is that very few people, regardless of wealth, will pay up for golden gadgets — it's just not practical. "Everyone is interested in this really extreme stuff, but 90% of affluent people come from middle-class backgrounds, and they bring middle-class values to their affluence."
Luxury, according to most people, is upgrading from a perfectly acceptable technology to one with a few extra bells and whistles, such as a high-definition TV, says Danziger. "Buying jewel encrusted cellphones is just not something normal rich people do," she says.
Which may be why the new cryptographic smartphone from JSC hasn't found any takers so far. Even really, really rich people think twice before buying a $1.3 million-dollar phone.