Vertu’s collapse shows that luxury smartphone technology really is only skin deep

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Let’s face it. The luxury market is going through a shakeup of epic proportions. The golden rule holds true as wealthy millennials decide with their pocket book what is and isn’t luxury. The smartphone industry is the latest category to go through a shakeup as early adopters and affluent gadget people refer to Apple and Samsung as luxury brands and buy up their top end models. Unfortunately for Vertu, a company that made exquisitely crafted smartphones, slower operating systems wrapped in the finest alligator skin case just didn’t cut it and the company recently folded after only being acquired several years ago.

We talked about luxury smartphones in a May, 2017 article titled Luxury smartphone technology: Some bling is only skin deep and we question the true differentiation between a luxury smartphone versus mass market higher end devices. Vertu may only be the beginning of consolidation in this industry and market watchers will be eyeing Gresso, the next biggest luxury phone-maker.

Affluent consumers demand the latest technology in mobile devices and as both iPhone and Galaxy reach their 8th editions, luxury smartphone makers just can’t keep up. Read more about Vertu’s collapse below:

Luxury smartphone maker Vertu collapses

The firm’s liquidation will result in the loss of hundreds of jobs

Vertu is going to liquidate after last-minute attempts to save the struggling luxury phone maker failed.

The British handset designer, which produced expensive devices for a niche luxury market, has recently faced serious financial difficulties which appear to have proven fatal.

As reported by the BBC, Vertu’s problems lay within “an accounting deficit of £128 million,” which has not been resolved despite being sold by the company’s owner, a Chinese holding company, to Turkish businessman Murat Hakan Uzan.

Uzan intended to pay £1.9 million for the brand to come out of administration, but with the company running with so much debt on the books, failure seemed inescapable without serious investment.

Unfortunately for Vertu, liquidation means that almost 200 employees will lose their jobs.

Founded by Nokia in 1998, the handset maker was known for creating handsets out of the ordinary. Vertu used leather, alligator and lizard skin, precious metals, titanium, and jewels, as well as synthetic sapphire for its screens.

These hand-made smartphones, however, came with very high price tags. The Signature range, for example, costs between £11,100 and £39,100 for a single smartphone.

The handsets were touted as being made from “only the most exquisite materials and cutting-edge technology.”

Speaking to the BBC, IHS Technology analyst Ian Fogg explained that Vertu’s business model was highly unusual.

“They hand make the phone at incredibly low volumes and they were incredibly high-priced,” Fogg said, noting that the use of synthetic sapphire and such unusual materials may also make the production process difficult.

It seems that while there are many in the world with money to burn, paying thousands of pounds for these smartphones did not appeal to a client base large enough to keep the company afloat — especially when you bring competitors such as Apple and Samsung into the picture.

It’s possible that Uzan, as he will retain the brand name, could rebuild. However, whether there are enough clients out there looking for ultra-luxury handsets to make such a business once again viable remains to be seen.

Introduction by Doron Levy / Article by Courtesy ZDNet

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