Vertu Mobile Phones: Luxury Redefined

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Case Details:

Case Code : MKTG151
Case Length : 11 Pages
Period : 2002-2006
Organization : Vertu
Pub Date : 2006
Teaching Note :Not Available
Countries : Worldwide
Industry : Telecom

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"We are not in the hundreds of thousands [per year] yet, but our aspirations are there."1

- Chris Harris, marketing director, Vertu, in August 2006.

"We understand communications technology. We believe now that we understand the luxury industry. It will take something for competition to match that." 2

- Nigel Litchfield, president, Vertu, in 2002.


In August 2006, Vertu, a maker of premium mobile phones and a subsidiary of Nokia, the world's largest mobile phone maker, announced that it was unable to meet the demand for its luxury phones and would increase its production capacity in the near future.

The mobile phones, or personal communication instruments, as they were referred to in the company's communications, were priced between US$ 4,900 and US$ 50,000 (as of 2006). The phones were handcrafted with high quality components including precious stones. The more expensive models were made of platinum.

Vertu had invested considerable money as well as time in conceptualizing and creating its range of luxury phones. These extremely expensive phones were primarily targeted at young and successful businessmen. Vertu realized early that mobile phones, far from being just a communication device, would also come to reflect the personality of their owners. While the Vertu phones evoked a good response, some analysts doubted whether the interest would be sustained.

As the product proved successful, the number of imitators was expected to grow quickly. And sure enough, companies like Mobiado3 and mainstream players like Motorola4, Samsung5, and LG6 launched high-end mobile models in the mid-2000s.

Even as Vertu phones won praise for their design and build, they were criticized for being technological laggards. However, company officials did not see this as a drawback, explaining that a typical Vertu customer did not place as much emphasis on cutting-edge features as he did on design and high value components.

Vertu Mobile Phones: Luxury Redefined - Next Page>>

1] Anton Shilov, "Vertu boosts production: Demand exceeds expectations,", August 18, 2006.

2] Aloysius Choong, "Platinum luxury phones have 'no competition',", March 22, 2002.

3] Mobiado, a part of the Bonac Innovation Corp., was established in 2004 with the sole objective of 'designing and developing the finest, most technologically advanced mobile phones'.

4] Motorola was established as Galvin Manufacturing Corp. in 1928. As of 2006, it is a leading player in wireless, broadband, automotive communications technologies, and embedded electronic products.

5] Samsung was founded in 1938 by Korean entrepreneur Byung-Chull Lee. The electronics division was incorporated in 1969.

6] LG was established in 1958 as Goldstar in Korea. In 1995, it changed its name to LG Electronics.


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