Luxury smartphones are a terrible idea and Vertu's problems confirm it
When I dream of being rich, the one thing that I never imagine buying is a luxury smartphone. It just doesn't make sense to spend tens of thousands of dollars on a device that, realistically speaking, isn't better than an iPhone or Galaxy S flagship. I have not conducted a scientific study to back this up, but I suspect that people who are actually wealthy would agree.
A luxury item, at least from my perspective, has to stand the test of time. It has to be just as attractive today as it was yesterday. A Rolex Submariner from 10 years ago isn't looked down upon now or perceived as worse compared to the latest model. But a phone, that's different. It actually becomes less appealing as time goes by, because its core functionality becomes less and less attractive to the owner when new generations hit the market.
If you look at a luxury phone from a decade ago, it is a relic compared to an iPhone 7 or Galaxy S8. Unless it's made from gold or another expensive material, nothing that it has is better than what's available now. The camera technology back then was crap, the processors were slow like snails, the operating system... well... it was worse than the first iOS or Android. Do I need to go on?
And, because people want to use a phone like a phone, no one in their right mind would want to buy that luxury phone that was released 10 years ago in the second hand market. The resale value is non-existent, because, let's face it, everyone and their dog would laugh at someone who bought one. Even the cheapest smartphone on the market today would be better.
The reason why I am writing this is because a report from The Telegraph that says that luxury phone maker Vertu is in trouble can't possibly surprise anyone who knows a thing or two about smartphones. A high price tag can't make a commodity attractive, even when it's wrapped up in a luxury shell.
What the likes of Qualcomm make available to companies like Samsung, or what Apple can build for itself, is the most that a company like Vertu can expect to use in its luxury smartphones. You can't buy a better camera or a better processor, that will be as good as the future generations, because that kind of exclusivity doesn't appeal to silicon makers. No one wants to have their latest and greatest tech available in devices that only a handful of buyers will be able to afford. It's simply not worth it.
And because what Vertu can offer isn't better than what Samsung and Apple can deliver means that it has no edge over its "lesser" rivals. When someone spends that kind of money on what is labeled as a luxury item they want to have that feeling, they want it to feel special. And they just can't get that with a smartphone.
If Vertu wants to survive in the smartphone market it needs to realize that. It wouldn't be the first niche company to bite the dust because it failed to understand the market.