Cell phones: Ringing in the moolah

Mobile phones have a luxury conundrum. “People buy luxury goods as an extension of their lifestyle and personality,” says luxury and hospitality brand consultant Deepa Misra Harris. “He says ‘This is who I am’.” But, how exactly do you stay luxurious and distinct from the rest of the herd when almost everyone on the planet has it?

Art curator and luxury consultant Arvind Vijaymohan defines luxury as “quality, heritage and heritage brought together in perfect form”. While that might work for a bag that’s handmade in a century-old European atelier or a fashion house with bespoke stitching, how does that work for a product that relies on the latest technology and features, and which becomes obsolete in a year?

“Phones are one of those rare categories where luxury is available to more people than a typical luxury product,” said lifestyle consultant Ashwin Rajagopalan. “Even if you pick up something like an iPhone 14 Pro Max, everyone (in your circle) can have one. (Even those outside your circle) can get one with EMIs and cash back.

Handset makers had tried to get away with it. Nokia had Vertu, its luxury mobile phone brand, in 1998. The phones came with all the luxury works: gold, sapphire bezel, jewels and black leather. “It worked for a while because at that time a phone didn’t do much beyond making calls,” Rajagopalan said. But once the smartphone era began, “Vertu was unable to create a true customer experience beyond luxury trimmings.”

Today’s mobile phone market is marked by camera features, artificial intelligence, operating system ecosystems, memory, storage, and many other technological features. They need cutting-edge innovations, and one killer new discovery can change the whole landscape overnight. This makes it difficult for a luxury brand to play in the same arena, limiting luxury attributes to perhaps a designer phone case or other accessories.

But, while it’s impossible to own a “one-of-a-kind” phone, something curious has indeed happened in India’s mobile phone retail space: a clear and distinct shift towards expensive phones. “The share of phones costing more than Rs 30,000 was 4% in 2019; it increased to 9% last year,” said Varun Mishra, principal analyst at Counterpoint Research. “In terms of value, the constitution accounts for 28% of total smartphone revenue.”

Globally, growth in the $1,000+ price segment was 94%.

Indian phone users have shown a clear preference to upgrade their phones. “As 5G becomes more widespread, consumers are upgrading their devices,” Mishra said. “Consumers whose finances have not been affected by the pandemic have used the additional disposable income created due to travel restrictions to purchase more expensive devices, including smartphones. During the pandemic, users also realized the importance of smartphones and started to see more value in upgrading their devices. Another interesting factor is that this trend in the ultra-premium market is pervasive across all regions, despite inflationary pressures.