Vertu’s demise shows why luxury smartphones are an awful idea

Vertu, maker of smartphones that cost more than some cars, is now all but dead. The company is shutting down operations, taking 200 jobs with it.

Despite multiple changes of ownership and various attempts to drive up sales Vertu has been in crisis mode for quite some time, taking drastic measures like dropping the prices of some of its phones from around $14,000 to ‘just’ $5,000 dollars.

Vertu’s owner, a controversial Turkish exile, will maintain brand assets and says he hopes to revive Vertu eventually, but the odds are looking slim. If you ask me, it’s amazing the company even lasted this long.

It’s one thing to be insanely overpriced, so long as the product you’re offering is on some level better than the competition. It’s another to be overpriced and worse than products available to the mainstream.

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Early Vertu models had specs that were about a generation behind the competition, and while recent generations caught up a bit, at no point did Vertu approach being the first or best on any particular spec.

Compare that with other luxury products. In fashion, luxury brands hire the best designers. They represent the pinnacle of the fashion world, even if you can get much the same quality for a tenth of the price. Many of their design choices eventually trickle down to the masses.

The same goes for cars; a Bugatti is overkill for almost everyone, but you can still acknowledge the engineering and technology that went into it. The most expensive cars are often the fastest, even if it’s impossible for their rich owners to achieve those speeds in any practical scenario.

Vertu was banking that exclusivity and premium materials alone would suffice. In an interview with The Telegraph, the company said it has an “acknowledged market niche.”

But it’s not enough to be exclusive – luxury brands have to be aspirational too. I can lust over a Lamborghini, even if I know I’ll never afford one. If I see someone wearing a beautiful Swiss watch, I might be a little jealous. But I can’t imagine why anyone would lust over a Vertu.

Sure enough, you don’t see celebrities carrying around Vertus – they buy Apple and Samsung, because those brands, generally speaking, make the best devices money can buy. A new iPhone is more of a status symbol than Vertu ever was.

And that’s because mass production simply makes better smartphones. Big data matters: Google and Apple are able to train their voice assistants, AI systems, and camera processing because of their huge number of users. Meanwhile, hardware choices are made to appease the masses, and are too reliant on rapid iteration for a small luxury brand to keep up.

All that being said, I do think luxury smartphones can build a niche, but not the way Vertu has done. Instead of a last-gen Android phone with fancy materials, how about a device that’s actually superior to the competition too?

My idea of an aspirational smartphone brand is one that pushes the boundaries of what’s available, even if it’s too expensive for mass production. Give me 16GB RAM, 512 GB of storage, a newfangled processor with crazy performance, three insanely-good camera sensors, a completely bezel-less sapphire screen, and a titanium build, and then maybe spending over $2K is justified. Maybe.

Even then, the device would suffer from the breakneck pace of technology. At best, it would only be average within five years. But at least it would offer a tangible improvement over the plebes upon release.

As things stand, luxury smartphones are an awful idea. Vertu’s death should surprise no one. If luxury smartphones are going to be a thing, let’s hope they give people reason to actually want one.