The Devil Dials Prada on LG's New Phone

Co-branded designer phones are the rage. The Korean outfit hopes the luxury fashion name will make a splash in the high-end handset arena

by Moon Ihlwan

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When Apple (AAPL) unveiled its long-anticipated iPhone at the annual Macworld trade show in San Francisco in early January, few received the news with more apprehension than Cha Kang Heui. Cha, the chief mobile phone designer at LG Electronics, has high expectations for a new co-branded handset due out next month that was designed with a team from Italian fashion house Prada.

The iPhone has certainly generated industry-wide buzz. However, opinion is divided about what sort of sales impact the wireless phone, music and video player, and mobile Internet browsing device will make in a very crowded field already dominated by Nokia (NOK), Motorola (MOT), Samsung Electronics (SSNHY), Sony Ericsson, and LG when it's launched in June (see BusinessWeek.com, 1/10/07, "The Future of Apple").

Even so, LG execs believe the Prada Phone, which will go head-to-head with Apple's iPhone in the high-end multimedia handset arena, is a game-changer. It boasts an elegant shape and design, graphic interface, and, of course, the Prada brand name that oozes high-fashion and luxury. "With or without the iPhone, our Prada phone and other models will give consumers a new experience," declares Cha. "Users will come back to us as long as we give them emotional satisfaction with easy-to-use software interface or intuitive look and feel."

Prada Price Tag

In a world awash with mobile phones, global manufacturers have now started to reach out to luxury brand purveyors to develop fashion phones that offer a way to charge more for a little panache—but also stand out. For instance, Motorola has teamed with the (RED) group, co-founded by U2 front man and activist Bono, to develop the Red Motorazr. Plus, Samsung and high-end Danish consumer-electronics firm, Bang & Olufsen jointly developed a high-end handset called the Serene (see BusinessWeek.com, 1/22/07, "Making the Serene Scene with B&O").

LG will see what kind of fashion instincts it has when the Prada Phone goes on sale in Europe in February. The design may be minimalist, but not the functions—or the price.

The multimedia phone, which will fetch €600 ($780), is not so different from other high-tech handsets. You can play and download music, surf the Internet, deliver voice mail, and read Microsoft's document files. It also doubles as an FM radio and comes with a 2-megapixel still and video camera. (Sales in Asia will begin in March, but LG is still negotiating with U.S. carriers for its U.S. debut)

Shift to Design Emphasis

The main difference from other phones is its radically simple appearance. Like Apple's iPhone, it removed clustered buttons and the keypad to rely on graphic icons on a big touch screen. And when not in use, the glowing icons disappear to reveal the pure black face that highlights the Italian fashion house's ubiquitous Prada logo.

LG is betting that the touch interface and the sleek design and status symbol allure will differentiate the handset from other ultra-slim, function-backed devices. That may not be easy. The thin-is-beautiful fad has been in motion since 2004, when Motorola scored big with its Razr lineup in 2004. "Phones have become a powerful accessory of consumers, and they seek expression of their personality with their accessories," says Cha.

Still, LG has shown some design panache in the past, what with the incredible success of its "Chocolate" phone. The Korean company, the world's No. 5 handset maker after Nokia, Motorola, Samsung Electronics, and Sony Ericsson, has sold some 7.5 million Chocolate phones since its global debut last May.