Vertu Corporation Limited, the well-known British manufacturer of luxury smartphones, has finally filed for insolvency after being passed between owners since 2012.
The company was known for its spangly, jewel-encrusted handsets which came with equally ludicrous price tags. Its entry-level handset cost a cool £6,500; prices stretched to more than £250,000 for the garish Vertu Signature Cobra.
Vertu was originally owned by Nokia, which limited it to the relatively restrictive Symbian OS. But Nokia’s designers -- emboldened by the company’s riches at the time -- relished the opportunity to experiment with the most expensive materials on the planet.
In 2003, Vertu released its Signature phone, which contained almost 5 carats of ruby bearings in its keypad. Devices commonly blended premium materials like calfskin, gold, and titanium, and were marketed as the smartphone equivalent to the Rolex watch.
After a decade of similarly exuberant devices, Vertu was sold in 2012 for $230 million, releasing Vertu from Nokia's clutches and allowing it to use Android. This should have been a step change, but the company failed to seize the opportunity. Its handsets were expensive, but lacked the up-to-date features of cutting-edge smartphones from Apple and Samsung which were a fraction of the price.
Vertu also bundled in a 24-hour concierge, similar to that provided by high-end hotels, allowing users to access instant lifestyle upgrades, benefits, and exclusive services. But Apple, and many manufacturers of Android handsets, caught on to the consumer demand for sleek, good-looking phones. At the same time, luxury brands moved into the smartphone space and began to offer their own high-end alternatives.
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Sold and Sold Again
A sale to a Chinese investment firm in 2015 failed to prevent the manufacturer from failing. In 2017, it was sold again to Paris-based, Turkish-born businessman Hakan Uzan, who paid $65 million. Uzan still owns the brand rights and plans to restart the manufacturing side of the company. That will be small comfort to the 200 people whose jobs hang in the balance and the numerous business creditors left with unpaid invoices.
Vertu had a captive audience when smartphones were plain and boxy. Owning one was a status symbol in its own right. But in a rapidly advancing market, few owners want to be crippled with old technology, even if it comes in a shiny case. Vertu's commitment to hand-made design, low volumes, and a niche market was eventually its downfall. The FT referred to its handsets, kindly, as "technologically modest". Wired, less elusively, simply called them "trash".
If nothing else, the failure of yet another formerly solvent tech firm will serve as a reminder that in business no company is "too big to fail" and that creditors should always be vigilant for changes to their customers credit profile.
Information For Creditors
If your company is a creditor of Vertu that has supplied goods or services for which you have not been paid your company will be an unsecured creditor in the liquidation.
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Image Vertu by flickr user Karlis Dambrans is licensed under CC BY 2.0