Titanium $329,000 Phone Seeks Watch-Loving Deep Pockets: Retail
April 16 (Bloomberg) -- Thomas Pruvot's frequent requests for the time while his mobile phone was switched off on a long- haul flight to Hong Kong in 2005 led the then 25-year-old Frenchman on a quest for the ultimate accessory.
Together with a childhood friend, Pruvot envisioned a luxury phone that would fuse modern technology with centuries- old Swiss timekeeping. The resulting startup, Celsius X VI II, developed a limited-edition titanium and sapphire crystal handset featuring a complicated mechanical watch that retails for 250,000 euros ($329,000).
As consumers increasingly rely on phones to tell the time and wear watches for status, Tag Heuer and Ulysse Nardin SA have also introduced high-tech handsets. Celsius aims to eventually sidestep perennial criticism about phones' battery life by building a model that's completely mechanically powered.
"The mobile phone is becoming the ultimate accessory," said Edouard Meylan, another Celsius co-founder. "We see our product as the pocket watch for the 21st century."
The market for luxury mobile phones is expected to grow 37 percent between 2010 and 2015 to $719 million, according to Euromonitor International. The biggest markets are China, Japan and regions such as the Middle East and Russia, where luxury tends to be more overt, according to Fflur Roberts, head of luxury goods research at Euromonitor.
"It's the smallest luxury market, but it's also the fastest-growing," Roberts said "It's an extension of a luxury watch or jewelry and it's a way of displaying wealth or success."
Nokia Oyj's Vertu has the biggest share of the luxury phone market, according to Euromonitor. The U.K. company set up in 1998 has sold more than 300,000 phones in the past decade, President Perry Oosting said last year. It has more than 80 retail outlets and sells at counters in high-end watch stores.
Vertu introduced its first touchscreen version, the 4,400- euro Constellation, in October. Top-end models, such as those in the Signature line, cost as much as 12,500 euros. Some celebrities are migrating from the Vertu to iPhones with gold or diamond cases, said Carolina Milanese, a research vice president at Stamford, Connecticut-based Gartner Inc.
Other watchmakers have also stepped in. Ulysse Nardin has a range of limited-edition smartphones called the Chairman including the brand's mechanical rotor that uses the wearer's motions to automatically wind the watch and a crown that can be hand-wound. Both fuel the phone's power reserve.
The Chairman retails for as much as $170,000 for the full pave diamond and black model with 18-karat white gold and more than 20 carats of diamonds. It's the most expensive phone produced by partner Scientific Cellular Innovations.
The Meridiist handset from TAG Heuer, owned by LVMH Moet Hennessy Louis Vuitton SA, allows users to switch between time zones and has a chronograph for measuring intervals. Retailing for as much as 30,000 euros, it also includes more than 430 hand-assembled components. TAG Heuer, which has developed three collections, plans to introduce at least one range each year.
The first model from Paris-based Celsius, called LeDix Origine, embeds a watch with clear panels to show its complicated mechanism on an outer flap that opens to reveal a phone using Sagem technology. The mechanical watch doesn't have to be turned off during flights, of course. Fifteen of the 18 handsets made for the initial LeDix model have been sold.
The tourbillon timepiece, invented in the 18th century to boost a watch's precision, contains a rotating cage that compensates for the effects of gravity on a watch's timekeeping. About 70 percent of the value of the handset is Swiss made, with the remainder coming from France.
Buyers will need deep pockets in more ways than one. At 250 grams (8.8 ounces) and 28 millimeters thick, the phone is 80 percent heavier and three times thicker than Apple Inc.'s iPhone 4s, which weighs 140 grams and is 9.3 millimeters thick. A BlackBerry Bold 9930 comes in at 130 grams and 10.5 millimeters.
"The fashion has moved on and the clam gives you a thicker design and you don't have easy access to your screen, which is what everything now gravitates around," Milanese said. "Luxury phones tend not to be smartphones. You don't buy them for the technology -- you buy them for the design."
Unlike luxury phones clad in gold and diamonds, Celsius emphasizes mechanical intricacy. The tourbillon handsets include 700 mechanical parts each, about half of them in the watch alone. One mechanism designed to eject the battery consists of 50 different parts, while opening the handset to make a call also winds up the mainspring used to power the watch.
Celsius, established in 2006 and built with funding from investors including France's Sofinnova Partners and IDinvest Partners, said it took six months to make each handset, which are sold through outlets including Harrods in the U.K.
"As we don't come from a watch background, we could do what we wanted and we had no history to respect," Pruvot, an industrial design specialist, said.
While Celsius is limiting output of the three tourbillon models in the LeDix collection to 40 pieces, the company aims to introduce around the end of this year a 150-piece collection with a 75,000-euro price tag. Another model to be introduced in 2013 will retail for between 35,000 euros and 40,000 euros and will be partly mechanically powered.
"Going after the luxury market, although the price point can be in the thousands of dollars, you sell very few units," Milanesi said. "It's really a niche market."
Celsius says it plans to stay focused on mechanical ingenuity rather than number of functions. It also wants consumers to become as attached to their handsets as they are to their watches.
"We want to be the Rolls Royce -- you keep it, most of the time, for your entire life," Meylan said. "Maybe you don't have all the functions, but you have the best and most useful ones and it's extremely reliable."
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