Research And Markets Research And Markets

Fashion and Style in the Mobile Handset Industry

  • ID: 302177
  • May 2005
  • ARCchart
1 of 5


  • Anna Sui
  • Diesel
  • Kimora Lee Simmons
  • Nokia
  • Samsung
  • Vertu
  • MORE

In developed mobile markets, consumers are becoming more sophisticated in their selection of handset, and this is driving a market for stylish and fashionable mobile phones. In this research report, it shows that there will be sufficient consumer demand to support the sale of 23 million fashion handsets by 2010.

There was a time when companies such as Nike, New Balance and Reebok produced 'running shoes'. Now these pieces of footwear sell in fashion boutiques, and vintage lines can trade for huge market premiums. The mobile phone is following a similar path, and fashion boutiques have become the point of sale for handsets from Siemens/ESCADA, Nokia/Versace, Vertu and the now defunct Xelibri. In addition, fashion designers such as Kimora Lee Simmons, Diane Von Furstenberg, Anna Sui and Vivienne Westwood have readily extended their design expertise onto handsets from Motorola and Samsung.

A fashion handset is one where the consumer's purchase decision is based primarily on the aesthetics of the device, and the primary conduit for fashion and style into the handset market today are the handset vendors themselves. In an age of standardised handset platforms, it is increasingly difficult for Tier One vendors to differentiate their products by simply adding enhanced technology features. For the consumer faced with a range of seemingly identical devices from a technical perspective, the aesthetics of a device can generate an emotional response to which they will ascribe READ MORE >

Note: Product cover images may vary from those shown
2 of 5


  • Anna Sui
  • Diesel
  • Kimora Lee Simmons
  • Nokia
  • Samsung
  • Vertu
  • MORE

Definition: Fashion Handset

1.1 The handset as a canvas for fashion, style and branding
A sociological connection between fashion and the mobile handset?

1.2 Marriages of fashion and style with technology
The iPod
The iPod's origins
The iPod's impact on Apple
The iPod fashion accessory industry
The iMac and the importance of portability
Nike and Philips: technology and fashion brand co-exist
Analysis of the fashion opportunity for Philips
Bang and Olufsen: selling style
Fashion and the digital camera market

1.3 Report summary

Regional trends

2.1 The mobile operators
Handset subsidies
Approach #1: No handset subsidies
Approach #2: Handset subsidies
Approach #3: Handset subsidies and technology control

2.2 The handset vendors
Component suppliers
Hardware reference designers
Original Design Engineers (ODE)
Original Design Manufacturers (ODM)
Original Equipment Manufacturers (OEM)
Market share

2.3 Dividing the market
Product groups
The voice phone
The feature phone
Handset bill of material analysis

2.4 Handset commoditisation
Silicon platforms and reference designs
Outsourced manufacture
The handset opportunity for non-handset vendors provided by ODMs

2.5 Handset replacement cycles


3.1 What is fashion?
The fashion industry and fashion brands
Where does fashion come from?
The fashion forecasters
Fashion forward
Fashion design vs. industrial design vs. product design
What does fashion mean for the mobile handset vendors?

3.2 What is style?
Designing in style
What is styling?

3.3 The importance of brands for fashion and style
Brand power
Handset vendors lack fashion credentials


4.1 Factors driving handset vendors towards fashion
Commoditisation of the mobile handset
The challenge to differentiate

4.2 Fashion and style strategies in the handset industry

4.3 Handset vendor strategies
The 8XXX range
The 7XXX range
Promoting fashion over form
Fashion co-branding

Focusing on style
Fashion co-branding

Fashion co-branding

Fashion co-branding
The outlook for Siemens' handset division

Sony Ericsson
The design context behind Sony Ericsson
Design success

4.4 Smaller handset vendors – diamonds are an ODM's best friend

4.5 Handset fashion objectives
The fashion premium
The objective behind co-branding


5.1 The Xelibri story
Setting out the brand strategy
Launch and innovation
Department store and boutique distribution
No operator involvement – no subsidy
Multiple devices
Busting the replacement cycle - two "collections" a year
Xelibri in the market
Logistics and merchandising
The Xelibri collections
An incongruous end

5.2 Lessons from the Xelibri experience
What Siemens did right
A diverse design team and third party product design
Logistics and technical support
Differentiated design
Where did Siemens go wrong?
Getting the technology right
Getting the product finish right
Matching design with demographic
Selling unsubsidised handsets in operator subsidised markets
Technology association


6.1 Handset fashion co-branding
Insight from Siemens and ESCADA
Choosing the brand – the brand fit matrix

6.2 The fashion brand
The ESCADA brand
The fit

6.3 Siemens ESCADA in the market
Pricing and value perception
Lesson learnt
The relative cost

6.4 Conclusions


7.1 Building a super luxury brand
The Vertu value proposition
Luxury and fashion

7.2 Vertu in the market.... 72
Accessories and a new range
The Ascent collection

7.3 Vertu challenges
Handset design
Marrying luxury and technology
Limited functionality

7.4 Nokia's future strategy for Vertu

Driving sales

8.1 Analysis of the UI

8.2 The handset UI today
The handset vendors
The mobile operators
Case study: Hutchison's

8.3 Summary


9.1 The operator quest for ARPU
Handset fashion and ARPU?

9.2 Case Study IV: Vodafone Ferrari
The Ferrari handsets
Vodafone facts
Vodafone and Formula One
Ferrari and Formula One
What's in it for Vodafone?

9.3 Fashion benefits for the MNO
Customer retention
Customer acquisition
ARPU growth
Enhancement of brand values
Subsidy removal
Tactical move against Tier One handset vendors

9.4 Issues for the MNO
Operator brand building
Branded handsets
Barriers to fashion

9.5 Summary


10.1 Fashion as a driver for secondary handsets

10.2 Technology issues


Market size

11.1 Lessons from the wrist watch market
Market size and companies
Market segmentation and pricing

11.2 Fashion handset market segmentation and pricing

11.3 What can fashion and brands deliver?
Fashion forward styling

11.4 New market entrants – fashion firms and brands
Skills which can be leveraged in handsets

11.5 The drivers for new entrants
Revenue case for ESCADA
Revenue case for Gucci
Access to new high volume market segment
Attractive margins
Commoditisation drives fashion margins
A new luxury goods item
Launch pad into technology market

11.6 The barriers to fashion and brand entrants
Operator resistance
Handset blocking
Possible solutions
Handset-only retailers
Design and manufacture
Possible solutions
Possible solutions
Phone connection and staff training
Possible solutions
After sales support
Possible solutions
Lack of technology kudos
Possible solutions


12.1 Introduction
Ocean Observations

12.2 Diesel
The brand
Concept handset design
The design process
GUI Design
Distribution and pricing

12.3 Jaguar
The brand
Concept handset design
The design process
GUI Design
Distribution and pricing
The Jaguar Collection

Fashion handset forecast

13.1 Methodology
Definition: Fashion Handset
Market segmentation

13.2 Analysis
Handset shipment forecast
Watch market segmentation

13.3 Results
Market size
Regional breakdown
Market value

13.4 Summary

List of Figures

Figure 1 – Breakdown of handset retail sales if fashion phone demand is satisfied: 2010
Figure 2 - iPod sales growth: 2001 – 2004
Figure 3 - Global handset shipment: 2003/2004
Figure 4 - Global handset shipment forecast: 2002 – 2008
Figure 5 - Summary of the handset retail experience under subsidy and no subsidy models
Figure 6 - Operator/Handset vendor value-chain schematic: no subsidy
Figure 7 - Operator/Handset vendor value-chain schematic: with subsidy
Figure 8 - Operator/Handset vendor value-chain schematic: with subsidy and technology control
Figure 9 - Cost of the Sony Ericsson s700i under various operator plans
Figure 10 - The handset value-chain
Figure 11 – Handset vendor market shares: 2002 - 2004
Figure 12 - Breakdown of the mobile handset pyramid by device type: 2004
Figure 13 - BOM estimates for the three handset types
Figure 14 - The commoditized handset value-chain
Figure 15 - EMS and ODM outsourced handset manufacture market share
Figure 16 - Handset replacements as a percentage of total sales: 2004 - 2009
Figure 17 - Advice on this season's fabrics from Promostyl
Figure 18 - The diminishing ROI of handset advancements
Figure 19 - The premium added by a fashion brand
Figure 20 - The brand suitability test matrix
Figure 21 - Relationship between exclusivity and overall market size
Figure 22 - Example of Nokia's Series 40 UI
Figure 23 - GUI similarity between Sony Ericsson and Siemens handsets
Figure 24 - Vodafone's handset iconography
Figure 25 - First evolution in 3's icon design
Figure 26 - Second evolution in 3's icon design
Figure 27 - Other services on 3 handsets with same styling as iconography
Figure 28 - Operator ARPU growth: 2001 - 2007Figure 29 - Mobile service decision drivers for US consumers
Figure 30 - Global mobile phone subscriber forecast: 2004 - 2009
Figure 31 - Fashion handset brand matrix
Figure 32 - Global handset shipment forecast: 2003 – 2009
Figure 33 - Handset ASP erosion: 2000 – 2005Figure 34 - Global luxury goods product market share: 2003
Figure 39 - Global handset shipment forecast: 2005 - 2010
Figure 40 - Watch unit sales by market segment for selected regions: 2005
Figure 41 - Handset fashion demand units by market segment: 2010
Figure 42 - Regional breakdown of fashion handsets: 2010
Figure 43 - Handset fashion sales breakdown: 2010

List of Tables

Table 1 - Typical feature sets of voice, feature and smartphone devices
Table 2 - Top 5 global brands by value
Table 3 - Top 5 global handset brands by value
Table 4 - Top 5 global fashion and luxury goods brands by value
Table 5 - Summary of the Tier One vendors' handset fashion strategies
Table 6 - How Nokia classifies its handset portfolio
Table 7 - Average premium available for the four handset fashion strategies
Table 8 - F1 team share of TV coverage: 2004
Table 9 - Significant MNO brand changes since 2000
Table 10 - Sales revenue of selected fashion/luxury watch brands: 2004
Table 11 - Segmentation of the watch market
Table 12 - Retail pricing for selected fashion watches
Table 13 - Selected companies in the top-end watch market segments
Table 14 - Market and pricing segments for handsets
Table 15 - Handset retail margins
Table 16 - Handset design and production management firms
Table 17 – Market, pricing and purchase driver segments for watches
Table 18 - Market, pricing and purchase driver segments for handsets

List of Images

Image 1 - A boxed Siemens ESCADA SL65 handset
Image 2 - Gucci mobile phone luxury lanyards
Image 3 - Apple's iPod portable music player
Image 4 - Nokia's Neo music phone
Image 5 - Siemens' SF65 iPod clamshell look-a-like
Image 6 – Siemens' SF65 [OPEN]
Image 7 - The Burton Amp iPod jacket [1]
Image 8 - Louis Vuitton, Gucci and Dunhill iPod cases
Image 9 - The Burton Amp iPod jacket [2]
Image 10 - Sony QUALIA 016 ultra-compact digital camera
Image 11 - Sony QUALIA 006 SXRD TV and 007 Super Audio CD Player
Image 12 - Nike Philips headphones, MP3 player and FM radio
Image 13 - B&O's BeoVision 5 plasma TV and BeoSound 2 MP3 player
Image 14 - HP Photosmart R607 designed by Gwen Stefani
Image 15 - The Nokia Versace 7270
Image 16 - The Jaguar concept handset
Image 17 - The vanilla phone
Image 18 - The feature phone
Image 19 - The smart- phone
Image 20 - A Kelly bag
Image 21 - An Eames chair
Image 22 – The Mini emblem
Image 24 - The Nokia 8810, introduced in 1998
Image 25 - The Nokia 8890
Image 26 - The Nokia 8310
Image 27 - The Nokia 8800
Image 28 - The Nokia 8910i
Image 29 - The Nokia 7250
Image 30 - The colourway variety of Nokia's 7210 range
Image 31 - Nokia 7270, 7260 and 7280
Image 32 - The Nokia 7610
Image 33 - Art-nouveau swooshes on the rear of the Nokia 7610
Image 34 - Nokia Versace 7270, with Swarovski crystal lanyard
Image 35 – The Motorola V70
Image 36 – The Motorola V80
Image 37 - Motorola's super-thin V3 RAZR
Image 38 - Motorola handsets co-branded with Phat Farm
Image 39 – Motorola's V600 with exterior designed by Vivienne Westwood (insert: photo of Westwood)
Image 40 – Samsung's SGH-E720
Image 41 – The Samsung A500
Image 42 – Samsung's E315 with exterior designed by Anna Sui (insert: photo of Sui) Image 43 – Samsung's SPH-A680 with exterior designed by Diane Furstenberg (insert: photo of Furstenberg)
Image 44 – The Siemens SL55
Image 45 - The SL55: Mrs. Beckham's phone of choice
Image 46 – The Siemens SL65
Image 47 - A boxed Siemens ESCADA SL65 handset
Image 48 - The Sony Ericsson T610
Image 49 – The Sony Ericsson K700i
Image 50 - The Sony Ericsson S700
Image 51 - The Sony Ericsson V800
Image 52 - Hilton, Lohan and Hawk with their diamante-encrusted Sidekick
Image 53 – DBTel's diamond studded fashion handset range
Image 54 - Xelibri 1: The Retro-Futuristic Classic
Image 55 - Xelibri 2: The Alien Beauty
Image 56 - Xelibri 3: The Mini-Pendant
Image 57 - Xelibri 4: The Dark Hero
Image 58 - Xelibri 5
Image 59 - Xelibri 6
Image 60 - Xelibri 7
Image 61 - Xelibri 8
Image 62 - The ESCADA experience
Image 63 - The Siemens ESCADA SL55
Image 64 - The Siemens ESCADA SL65: 'Diamonds and Diamantes'
Image 65 - The Siemens ESCADA SL65: Rockin' Rio
Image 66 - Audemars Piaget luxury watches
Image 67 - The Vertu Signature polished yellow gold
Image 68 - The Vertu Signature platinum
Image 69 - The Vertu Ascent Red
Image 70 - The Vertu Ascent Black
Image 71 – Nokia's 7260 with uninspiring UI
Image 72 - Formula 1 iconography on Vodafone's Sharp 902 Ferrari handset
Image 73 - The Vodafone Ferrari Sharp 902 handset
Image 74 – The Vodafone Ferrari Sharp GX-25 with box
Image 75 - Ferrari iconography on the Sharp 902 Ferrari handset
Image 76 - The Vodafone brand on chaises, shields and Schumacher
Image 77 - Diesel handset concept design: aspect 1
Image 78 - Diesel handset concept design: aspect 2
Image 79 - Diesel handset concept design: aspect 3
Image 80 - Diesel handset concept design: aspect 4 & 5
Image 81 - Diesel handset concept user interface
Image 82 - Jaguar's crafted and refined interiors
Image 83 - Jaguar concept handset: aspect 1
Image 84 - Jaguar concept handset design: aspects 2, 3 & 4
Image 85 - Jaguar concept handset user interface design
Image 86 - Jaguar's merchandise collection
Image 87 - Jaguar concept handset design: colour samples
Fashion and Style in the Mobile Handset Industry

List of Promotions
Promotion 1 – We are all the same; your iPod is unique
Promotion 2 – Vamping Canon's IXUS i5
Promotion 3 - Images of fun and youth associated with the Nokia 3220
Promotion 4 - The Nokia 7260, 7270 and 7280 appearing in a premium fashion magazine
Promotion 5 - Flash promotion for the Nokia 7260, 7270 and 7280 appearing on the Nokia website
Promotion 6 - Motorola's 'Moto' campaign for the V70
Promotion 7 - 'DigitALL' from Samsung – Let it move you
Promotion 8 - The SL55 in the hands of those who are fashion aware
Promotion 9 - How do you measure style on the S65?
Promotion 10 - Aguilera appears at the London launch of Xelibri
Promotion 11 - The utterly bizarre Xelibri 'Dancing is illegal' television advertisement
Promotion 12 - Xelibri targeted as street fashion
Promotion 13 - Graff diamond jewellery
Promotion 14 - Diesel: WORK HARD
Promotion 15 - 'Successful Living' according to Diesel
Promotion 16 - Jaguar's combination of style and contemporary luxury

Note: Product cover images may vary from those shown
3 of 5


  • Anna Sui
  • Diesel
  • Kimora Lee Simmons
  • Nokia
  • Samsung
  • Vertu
  • MORE

There was a time when companies such as Nike, New Balance and Reebok produced 'running shoes'. Now, these pieces of footwear sell in fashion boutiques, and vintage lines can trade for huge market premiums. Will we one day see mobile phones being sold in fashion boutiques? We are already there. In the space of 15 years, the mobile handset has moved from a niche telephony device, to become the most ubiquitous item of personal consumer electronics worldwide. This has made it an obvious tableau for the expression of an individual's fashion tastes and style.

The handset is a fully mobile device: it travels everywhere with its owner and is visible to others. To make a call it is placed to the side of the head. To compose a text, the device is held out in front. It is laid out on tables in office meeting rooms and school canteens, beside you in restaurants, and at the bar. The handset can act as an ideal canvas for an outward and visible statement of the owner's tastes and values.

Fashion is the ever-changing pattern of consumer tastes, driven by a wide range of random events. Events such as war, a shift in house prices, the introduction of a new technology, or the emergence of a new musical sound, can influence the consumer taste curve. In practice, fashion is something more specific. It is a set of seasonally driven colours, styles, and motifs that are combined and mixed in a huge variety of ways by a wide range of parties in order to appeal to targeted consumer demographics. This is not restricted to designers sending dresses down the catwalk, but also includes car manufacturers, furniture producers and mobile handset manufacturers, among many others.

A fashion handset is one where the consumer's purchase decision is based primarily on the aesthetics of the device. The aesthetics include both the styling of the device as well as any brand associated with it. Today, the primary conduit for fashion and style into the handset market are the handset vendors themselves. As a result of the increasingly commoditized conditions in the handset industry, the return on technology innovation is falling. In an age of standardised handset platforms, it is increasingly difficult for Tier One vendors to differentiate their
products from that of low-cost, Asian ODMs by simply adding enhanced technology features.

For the consumer faced with a range of seemingly identical devices from a technical perspective, fashion and styling allow a reasoned, value-driven consumption decisions to be made. The aesthetics of a device can generate an emotional response by consumers, to which they will ascribe a value and for which they will pay a premium.

The result is that fashion and styling are playing an increasingly important role in the profitability strategies of the handset manufacturers as they strive to distinguish their products in the market. This has been, and will continue to be, a key driver of fashion into the mobile handset market. The report examines the fashion and style strategies employed by the major handset vendors in the market today. These strategies fall into four groups, consisting of: the incorporation of fashion and styling elements across a handset portfolio; co-branding collaborations with fashion brands; formation of a sub-portfolio of handsets geared specifically at the fashion and style conscious market; and the establishment of independent, fashion focused handset subsidiaries. Nokia is the only vendor adopting all four strategies, while Sony Ericsson employs just one.

Four case studies are presented, analysing fashion and style ventures executed by handset vendors and mobile operators. These include Siemens' Xelibri, the Siemens ESCADA venture, Nokia's Vertu and the Vodafone range of Ferrari handsets. For each, we look at the rational behind the project, the benefits achieved by both the fashion and technology partners, and we provide a critique of these projects' successes and failings.

There are clear benefits for the mobile operators in distributing fashionable and branded handsets through their channel, including opportunities for customer retention, customer acquisition, ARPU growth, enhancement of brand values and subsidy removal. However, there are also a number of difficulties for operators in becoming involved with these devices, and much of these issues revolve around conflicts of brand.

It is the holy-grail for handset manufacturers to sell more than one handset to each mobile subscriber. A user might have a daytime handset for power use, and a sleek evening handset with fewer functions, but a more fashionable form factor. Vertu and Xelibri were more about creating fashionable and stylistic handsets, but multiple handset ownership was the side-effect in some cases. While the mainstream consumer market has not widely demonstrated a desire for multiple handsets, the report examines how fashion handsets will drive the market for secondary phones.

Fashion brands have entered into partnerships with Tier One vendors to produce co-branded fashion handsets, however, none have taken the next step: independently producing their own-designed phones, outside of an operator or vendor collaboration. We contend that the mobile phone market has matured to the extent where a portion of the market will derive 'utility' from the device's styling and branding. This is an audience to which fashion brands can deliver more value than the current handset vendor brands who are tied into their technology and engineering roots. The report outlines the type of fashion, brand and lifestyle companies for which there is a handset opportunity and discusses the factors which will incentivise these companies to enter the market, as well as the barriers which will restrict some of them.

The report presents two specific examples of how fashion and brand companies can leverage themselves within the handset market. We look at two companies, Diesel and Jaguar, providing a background of these companies and details of their brand position. We then present concept designs for handsets which these companies could launch and target at a fashion and brand conscious market. Created by design firm, Ocean Observations, these concept designs are based heavily around themes and idioms closely linked with the brand, and cover the design of both the external form factor and the graphical user interface. A discussion of how these example companies might go about retailing their fashion phones within the market place is also presented.

We believe that the global wrist watch market is an effective example of how the global handset industry could mature. An overview of the watch industry is presented, highlighting the fashion, style and brand components of this market and drawing parallels with the commoditizing handset industry. We believe that consumer behaviour in watch purchasing will be mirrored in handset purchasing when the mobile phone market has matured sufficiently. By mapping the consumer purchasing segmentation of the watch market onto a future, mature, handset market, we determine a measure of future demand for fashion handsets.

As the market matures and consumers' handset tastes become more sophisticated, demand for fashion phones will increase. We estimate that, by 2010, sufficient consumer demand will exist to support the sale of 23 million fashion and luxury fashion handsets. While this will account for just 2% of all handsets shipped worldwide, the sale of these phones will constitute 12% of handset retail revenue.

Note: Product cover images may vary from those shown
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- Nike
- New Balance
- Reebok
- Siemens
- Nokia
- Versace
- Vertu
- Xelibri
- Kimora Lee Simmons
- Diane Von Furstenberg
- Anna Sui
- Vivienne Westwood
- Motorola
- Samsung
- Sony Ericsson
- Ocean Observations
- Vodafone
- Ferrari
- Apple
- Philips
- Bang and Olufsen
- Diesel
- Jaguar

Note: Product cover images may vary from those shown
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Note: Product cover images may vary from those shown