This $310,000 phone blings, then rings

From Vertu to Motorola, handset makers are discovering that limited-edition cell phones rock - in some cases, literally.

By Michal Lev-Ram, Business 2.0 Magazine writer-reporter

(Business 2.0 Magazine) -- Paris Hilton is a woman of few words, even when she's endorsing products. This summer, while at the launch party for the newest T-Mobile Sidekick, the hotel heiress showed off a Swarovski crystal-encrusted version made just for her. "That's hot!" she gushed.

That two-syllable catchphrase was all wannabe socialites needed to hear: Within weeks, Crystal Icing, the company responsible for the "bejeweling" of Hilton's cell phone, received hundreds of orders for the custom-made devices, ranging from $260 to $600 apiece.

cell_phones_luxury.03.jpg
BLING 'N RING: Motorola and T-Mobile are both selling special-edition handsets this holiday season.
Photo GallerylaunchSee more photos

Even better for T-Mobile, Hilton's endorsement helped catapult the Sidekick 3, the latest version of the No. 4 carrier's signature phone, to instant cool status. Hipsters from New York to Los Angeles - along with celebrities like Jessica Simpson and Snoop Dogg - have been snapping up the device.

Remember when even owning a cell phone counted as a status symbol? Today phones have become much more than that. Users treat their handsets almost like beloved pets. And just like their iPod covers from Kate Spade and Prada, consumers want cell phones to ooze style, power and prestige.

So what better way to show a little holiday love than the $1,275 Samsung Serene from Bang & Olufsen? If you're really feeling the spirit, you could always plunk down the credit card for the $310,000 diamond-encrusted Signature Cobra from Vertu.

Avi Greengart, a mobile device analyst with Current Analysis, calls it the "fetishization" of cell phones. "Cell phones really lend themselves to going beyond pure tech and into the realm of personal accessories, as a fashion item."

Yet they're hardly technological wonders. Many of these phones don't have standard features like built-in cameras or MP3 players. Score one for form over function.

Perfect window dressing

T-Mobile started the trend in the United States last holiday season when it teamed with Juicy Couture and the East Los Angeles graffiti artist known as Mister Cartoon to come out with two limited-edition Sidekick IIs.

The Mister Cartoon phones sold out within weeks and were such a big hit that members of the SuperSonics basketball team in Seattle, where the device wasn't sold, reportedly dispatched underlings to Los Angeles to pick some up. Meanwhile, the Juicy Couture phones, originally priced at $349, now command prices up to $1,000 on eBay.

Motorola sells a $400 Razr from fashion house Dolce & Gabbana, while Samsung now has phones designed by fashion mavens Betsey Johnson and Anna Sui.

This year T-Mobile is offering two limited-edition Sidekicks: a Diane von Furstenberg model featuring her trademark red-hot lips against a black backdrop and an army green device from urban clothing brand Lifted Research Group. Both versions cost $349, or $100 more than the standard Sidekick 3.

Michael Gallelli, director of product marketing for T-Mobile, says the carrier isn't so much looking to reap huge sales from its limited-edition phones as it is hoping they'll drive sales of flagship phones - in much the same way fashion designers use the catwalks of Paris and Milan to boost interest in their mass-produced clothing lines.

"Special edition phones create a halo around the flagship product," notes Gallelli. "Even if people don't buy the new editions, it draws them to the brand."

But no company has gone as far with tricked-out cell phones as Vertu, a maker of luxury phones and a Nokia subsidiary. Reportedly toted by the likes of Gwyneth Paltrow and Madonna, some Vertu phones are made of white or platinum gold and pimped out with sapphires and other jewels.

Its new Signature Cobra is perhaps the most expensive cell phone on the market: Designed by upscale French jeweler Boucheron, the Cobra has a pear-cut diamond (two carats), a round white diamond (one carat) and no fewer than 439 rubies. Vertu, which recently announced the new design, says only eight $310,000 Cobras will be made. (Sales of a cheaper version, the $115,000 Python, will be capped at 26.)

The least expensive Vertu phone: $4,350 and stainless steel with leather.

To be sure, special-edition phones aren't always the hot sellers they're hoped to be. Palm once released a Claudia Schiffer version of its Vx handheld device, but analysts say sales did little, if anything, for the Vx brand.

The likely reason: Palm's target customers are CEOs and other corporate suits who probably weren't sold on the idea of buying a new work device simply because a supermodel endorsed it.

"I don't think it did much of anything for Palm's image," says Greengart, the mobile analyst. But don't think Palm paid a heavy price for the misfire. Greengart points out that carriers don't have much to lose with limited-edition phones since not many are sold and expectations tend to be low.

"The goal with most of these is not to generate a huge amount of sales," he says. "But it can sure jazz up a brand."

In Hilton's own words: that's hot. Top of page

To send a letter to the editor about this story, click here.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.