Vertu Goes Beyond Bling With $9,500 Ostrich-Leather Phone

Bling isn’t the first word you’d associate with Max Pogliani. The 49-year-old chief executive officer of Vertu, maker of luxury smartphones, showed up for an interview in London this week dressed in a conservative navy suit with a chocolate-brown briefcase at his side.

The device he wants to show off is similarly restrained, at least compared with some of Vertu’s past products. The new Aster smartphone, a leather-clad Android handset in shades from “caviar” to “cognac,” doesn’t have a gemstone or glimmer of gold in sight.

The company, sold by Nokia Oyj in 2012 to private equity firm EQT Partners, made its name selling diamond-studded mobile phones to the nouveau riche in emerging markets. It is now toning down the flash and improving its technology to appeal to a broader range of customers. It’s also trying to keep existing clients from switching to devices made by Apple Inc. and Samsung Electronics Co., which have bulldozed most rival phone-makers.

Based in the English village of Church Crookham, Vertu “is taking a more understated luxury approach to match what the consumer is today,” Pogliani said in an interview with Bloomberg News. A decade ago, “it was very much liked by the emerging new rich, the emerging wealth. But then the world has changed in terms of phones and in terms of customers.”

That doesn’t mean its new devices are cheap. The Aster, featuring a customized version of Google Inc.’s Android and a 13-megapixel camera, starts at 4,200 pounds ($6,800) for a basic, calf-leather model -- rising from there for more exotic materials such as ostrich leather, which costs 5,900 pounds ($9,500). That’s more than 10 times the cost of a basic iPhone 6, itself one of the most expensive smartphones on the market.

Timeless Phones

Still, until Vertu starts making phones that are as timeless as a Rolex or Patek Phillipe watch, it is going to have trouble convincing people beyond its super-wealthy clientele to spend almost $10,000 on something that will have to be replaced every few years, said Jim Prior, chief executive officer of Lambie-Nairn, a brand consultancy. He was a brand adviser for Vertu when it was still part of Nokia.

“The proposition hasn’t quite delivered on the promise,” Prior said, “which is why they’ve ended up with jewels and a certain amount of bling as opposed to what they really want to do, which is about a much more sophisticated offer.”

Pogliani, who describes himself as a brand-builder, worked at Nestle SA’s George Clooney-endorsed Nespresso unit before joining Vertu in 2012 as marketing chief.

Left Behind

When he arrived the company was emerging from a tie-up with Nokia that bound it to outdated technology with limited Internet access and small screens, just as the rest of the world was demanding iPhones.

EQT, the Stockholm-based buyout firm that owns Scandic Hotels and catering group SSP, bought Vertu from Nokia in a deal that valued the company at about 200 million euros ($252 million), people familiar with the deal said at the time. Until the sale, Vertu phones ran the defunct Symbian operating system, leading mobile-industry analysts to dismiss them as jewelry rather than real technology.

Since then the company has switched to Android, the most popular smartphone operating system. The new phone has 10 antennas for high-speed fourth-generation wireless, meaning customers will have 4G access worldwide, Pogliani said.

“Having the technology is a prerequisite now,” he said. Vertu doesn’t disclose financial figures, so the success of its new strategy is difficult to judge. The company has sold about 400,000 phones over slightly more than 10 years. Sales grew in nine of the 10 years to 2013.

High Status

Yet improved technology won’t necessarily guarantee customer loyalty. If Vertu wants to thrive, it needs to become more about the services that come with it and what that indicates about a user’s status -- in a similar way to how American Express Co. markets its invitation-only Centurion Card -- said Jez Frampton, global CEO of Interbrand Corp., a brand consultancy.

Pogliani has started to address this, adding tiered concierge services to Vertu that give the best-paying customers telephone access to a dedicated personal assistant, he said.

“There are obviously going to continue to be people who want them encrusted in gold and rubies,” Frampton said. “The question is whether or not they can strike that balance between the need for constant upgrades in technology, the need for differentiated services and the need for a personal statement.”

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