Test Drive a Porsche Cell Phone

Porsche adds a mobile phone to its luxury line of watches, ties, and, um, cars. It may be the preferred accessory for those who can't afford its wheels

Since 1948, the Porsche brand has been synonymous with sleek and fast. Cars, that is. Yet in 1972, the German automaker began designing luxury accessories, a lineup that now includes luggage, eyewear, watches, and ties. Now comes Porsche's boldest foray outside its comfort zone: On June 12, Porsche Design Group unveiled its first mobile phone, in France of course. And there are plans for more Porsche phones.

Designed by Porsche, but engineered and manufactured by France-based Sagem, the $1,600 handset will debut in Britain, Dubai, and other overseas markets later this year. The phone is expected to reach the U.S. in early 2008, possibly through Porsche auto dealerships and the five U.S. Porsche Design stores.

This is not the first time a cell phone maker has partnered with a world-renowned automotive brand. In 2003, Motorola (MOT) unveiled two Harley-Davidson (HOG) versions of its V60i phones for the U.S. market. Detailed with leather or chrome to achieve a tough Harley look, the gadgets were engraved with the motorcycle maker's 100th anniversary logo. Similarly, Sharp teamed with Ferrari in 2005 on a red GX25 Ferrari phone that was sold by wireless service provider Vodafone (VOD) in Britain. Earlier this year, Vodafone also launched the McLaren Mercedes GX29, a square, metallic phone for fans of the Formula One racing team co-sponsored by Mercedes-Benz.

But Porsche's phone, the P'9521, may be the first such handset not intended as a one-off, limited-edition wonder. Just as the company's Porsche Design subsidiary keeps putting out new patterns of silk ties, it plans to expand the cell phone line. Porsche's deal with Sagem, the world's No. 6 cell phone maker and a subsidiary of Safran (SAGM), runs for three years.

Porsche and Sagem already plan to introduce a second, slider-design phone in the first quarter of 2008, says Stéphane Bret, a vice-president at Sagem. A third model is due in mid-2008. Each handset is to debut in Europe, and Sagem expects to make from 100,000 to 150,000 combined per year. The first Porsche phone will retail for 1,200€, or $1,600, but dealers might also give them to their best clients, Bret says. "We see a lot of demand," he says.

High-End Phones that Unlock the Car

The notion of automaker-turned-phonemaker may grow more common if, as many experts expect, mobile handsets become more integrated with cars themselves. Future handsets may be able to locate a car in the parking lot, lock and unlock doors, or remind the driver it's time for an oil change, says Richard Doherty, director of the consultancy Envisioneering Group. As a result, Mercedes-Benz, BMW (BMW), and Volkswagen (VOWG)—all longtime dabblers with in-car accessories for phones—are believed to be developing handsets to sell with their cars or separately, he says. These carmakers could introduce their own branded phones as early as 2008, Doherty believes.

The timing is fortuitous: Demand for high-end phones is expected to rise in the coming months as Apple (AAPL) introduces its much-anticipated iPhone, which will retail for as much as $599. Americans, though accustomed to getting their phones cheap or even free by signing two-year service contracts, appear to be willing to start paying more for handsets associated with cool brands like Apple. Fashion houses Prada and Diane von Furstenberg are already designing handsets, while Gucci is also rumored to be developing one. In reality, as basic features vary little from phone to phone, popular, non-wireless brands may be the key to selling more devices for a higher price. "We are going to see fashion, personality, lifestyle brands [driving cell phone sales]," says Doherty.

Porsche's Product Placement

Porsche needs to tread carefully, though. Over the years, Ferrari has put its brand on everything from laptops to T-shirts that sell for as little as $16. "They've bastardized their brand," says Marshal Cohen, an analyst with NPD Group. So far, Porsche has avoided that trap. Its P'8400 series sunglasses are made of titanium and sell for $200 to $450. A P'1850 tie, made in Italy of 100% pure silk, can be had for around $140.

Meanwhile, though many U.S. automakers are struggling, Porsche is seeing its U.S. car sales and fan base balloon. In May, for example, U.S. Porsche sales were 50% higher than in the same month five years ago, when they totaled 2,200, according to the auto research firm Edmunds.com. A Porsche phone could, potentially, expand the company's fan base among people who can't afford the ride. "Porsche is not a car for everyone," says Cohen. "Even if you can't afford a Porsche, you know all about it. Porsche is a lifestyle, it's about being unique and a cut above everyone else. The phone struck me as a phone a guy who wanted to be the first on the block will want."

Calling on the P'9521

Sagem is counting on the phone's success here and now. Amid pressure from Nokia (NOK), Motorola, and other top phonemakers, the company has been suffering from declining margins and market share. In the first quarter, sales in Safran's communications business, including mobile phones, declined 17.2% compared with the same period a year earlier. "They are compelled to experiment," says John Jackson, a market analyst with Yankee Group. Sagem is doing just that: It's already released a phone bearing the colors of the French Open tennis tournament and a handset under the Oxbow sportswear brand.

The P'9521 has the high-end quality of the Porsche brand stamped all over it. Made from aluminum and mineral glass—a scratch-resistant material used in watch crystals—the device looks somewhat square-shaped. The design is meant to conjure the image of a Porsche engine, says Bret. Yet, "it's more of a luxury object, like a watch, than a mobile phone," he says. Click here for the slide show

The device features a large swivel screen made with an organic, light-emitting diode display, a technology that remains rare in consumer electronics. The display allows for more vivid colors and easier viewing in bright sunlight, yet cuts back dramatically on battery drain. Other high-end features include a fingerprint reader for security, a 3.2 megapixel camera, and an MP3 player with three stereo speakers.

Now comes the hard part: Proving that the product is up to Porsche's standards. "They have to be 100% sure the product deserves the name," says Toprak.

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