Technology | Media | Telecommunications

Friday, August 15, 2008

Designer Brand Mobile Phones Add Profit

Ready for your designer handset? Dior recently introduced its own line of in-house designed mobile phones. Other prestige brands are also adding cellular handsets to their product lines.

As personal items used frequently in public, mobile handsets can take on a powerful symbolism, representing the user's social status and personality. In partnership with handset manufacturers and vendors, luxury brands are starting to carve out a distinct niche within the cellular handset industry.

ABI Research forecasts that revenues from luxury branded handsets will exceed $11 billion next year, increasing to more than $43 billion in 2013.

Research director Kevin Burden comments, "For luxury goods producers, mobile phones are a logical addition to their basic product portfolios of jewelry, watches, and other fashion accessories. From the perspective of handset manufacturers, a luxury mobile phone does not simply mean a new handset model, it represents a meaningful strategic approach to increased brand equity."

Given the heated price competition in handset markets, vendors have struggled to deal with low margins. Cost-cutting alone is to some extent seen as of questionable effectiveness as a way around this impasse.

Given the competitive environment in the handset market, manufacturers are looking for ways to differentiate their intangible assets -- premium value and brand power.

Since a handset comprises a mass of technological attributes, its market value is basically determined by all of the components and labor, and its technological performance.

This is not likely to change. But consumers are also very aware of brand image and premium value. This gives manufacturers additional leverage in securing customer loyalty, and increasingly forms part of vendor's long-term strategies for growth.