Why There's No Luxury Mobile Phone Market

Sony Ericsson has revealed its new luxury phone brand, Satio, which will go on sale for $800 or so later this year. I'm not at all clear on who is going to buy it.The idea of "luxury" usually involves some attribute of greater benefit or value. Paris Hilton-inspired branding aside, expensive stuff is supposed to be more durable, better performing, or otherwise a noticeable improvement over cheaper stuff. Consumers do the approximate math in their heads: if most things cost "X," yet this other thing costs "X+Y," then prove to me why. The equation isn't always rational, or particularly smart, but it's reality.

This is why there's no real luxury mobile phone market: most phones are effectively free to consumers, inspired by King Gillette's idea that airtime, like razor blades, is where profits come from. There's a tier of devices that cost a few hundred bucks that do lots more than telephony (from BlackBerry, Palm, Apple). My guess is that the majority of those purchases are company-paid, and that there's user loyalty to the manufacturer brands, not only the products themselves.

What's the "X+Y" rationale for Satio and its two somewhat lesser-priced siblings (Aino and Yari)? A 12 megapixel camera so powerful that it doubles as a scanning electron microscope. A touchscreen filled with icons, and an OS that allows for rampant customization (i.e. enables users to render their phones inoperable in any number of ways). Music on the Aino will play in formats that require twice the space of smaller .mp3 tunes, yet sound indistinguishable from them. The Yari will let people who buy $500+ phones play more games.

In other words, it's the "X" that comes with any free phone, plus a whole lotta "Y" that begs the question why?

Here's a thought for you: what if the real novel invention from Sony Ericsson wasn't in pricing some technology-gone-wild gizmo at an ungodly amount, but rather it created a new way for people to possess them? I'm thinking that the car makers lease vehicles, so the cost is spread out over time, and consumers can then trade in their cars for the newer, sexier models (or sell them for their residual value). Mobile phones are worthless within a few years of manufacture (at best).

If Sony Ericsson came up with a really believable, good-deal how for buying really expensive, luxury phones, would that equate to a why for you?

Jonathan Salem Baskin writes the Dim Bulb blog and is the author of Branding Only Works On Cattle.