CELL PHONE ACCESSORIES ENTER REALM OF COUTURE

Glitzy Garnishes Might Cost More Than the Phone Itself; A Market Worth $1.5 Billion

By Li Yuan, WSJ March 1,2006

Anastasia D’Amato was talking on their T-Mobile Sidekick when three curious teenage girls stopped her on a sidewalk in Brooklyn, N.Y. They wondered where she had taken her cell phone to get it studded with colorful crystals.

"I get a lot of attention" from it, says Mrs. D’Amato, who paid NYC Peach LLC, an accessory company in Manhattan, $400 to adorn the $300 device with Swarovski crystals.As cell phones become more like fashion pieces, phone accessories and adornments are following suit. Gone are bulky black phone cases that clip to belts. In are all kinds of stylish touches - jewels, charms and colorful phone cases that are carried around like handbags.

The craze surrounding Motorola Inc.’s sleek Razr phone, which industry analysts say has sold roughly 20 million units globally and carries three hues of pink in the U.S. market, demonstrated that consumers are willing to pay more for a phone that looks stylish. Yet increasingly people like Mrs. D’Amato feel that a cell phone alone doesn’t make enough of a fashion statement.

Cell phone accessories are a big and profitable market. On average, one out of five new cell phone-service subscribers buy accessories, such as phone cases, car chargers and headsets, according to Ovum, a technology-research firm. In 2005, the market was valued at $1.5 billion and is expected to grow 10% each year in the next few years, says Ovum analyst Roger Enter.

For years, some famous handbag brands, such as Coach Inc. and the Louis Vuitton line of LVMH Moët Henessy Louis Vuitton SA, have carried cell phone cases as a small part of their accessory lines. Now that fashion phones like Razr are hot sellers, wireless-service providers are joining up with designer brands. T-Mobile USA Inc., a unit of Deutsche Telekom AG, has teamed up with Juicy Couture, a brand of Liz Claiborne Inc., while Sprint Nextel Corp. formed exclusive partnerships with designer Nicole Miller and handbag maker Dooney & Bourke.

T-Mobile and Juicy Couture, known for its casual luxury clothing, recently introduced a new version of the Sidekick called Juicy Sidekick, which comes in pink, along with a line of accessories such as pink velour phone cases with chunky golden chains. Pricies for Juicy Couture accessories range from $25 for a phone charm to $80 for a phone case.

T-Mobile has also teamed up with NYC Peach, the accessory boutique that decorated Paris Hilton’s famously lost Sidekick with Swarovski AG lead crystals, and SkinIt Inc., a Golden, Colo., company that makes vinyl skins for mobile devices. NYC Peach charges $400 per device for studding crystals in different colors and patterns on cell phones and devices such as the Sidekick, BlackBerry and Treo. Its clients include Lindsay Lohan, Jessica Simpson, Beyoncé and Sarah Jessica Parker.

A picture of 4 very elaborate cell phone cases, one set with crystal from swarovski and another with charms.

SkinIt’s products appeal to phone users with more modest taste. It charges $10 for a cell phone skin set and $13 for electronic organizers, custom cut for each model. Customers can choose from hundreds of patterns, form abstract art to pictures of professional baseball players. Or, if they prefer, they can load a picture of their children or pets for a customized skin that costs an extra $4.95. About 40% of SkinIt customers choose to use their own patterns, the company says.

Sprint introduced designer phone accessories to attract female customers. After conducting market research in 2004, the company found that female cell phone users are interested in phone cases just big enough to carry cash, key and a cell phone for quick errands and attractive enough to match their personal styles. "Average women don’t want to carry their [phone] cases on their belts," says Kelly Whalen, a product manager at Sprint. The phone company contacted Ms. Miller, the designer known for her "little black dress," and Dooney & Bourke to design stylish phone cases, some of which look more suitable to match evening dresses than business suits. The phone cases from the two brands are priced between $30 and $50.

But the more affordable phone accessories are charms, which have been popular in some Asian countries for several years Each charm has a tassel that can be threaded through a small loop that many phones have. Most phone charms in the U.S. market are jewelry charms, but in Asia they can be anything: stuffed animals, dolls, movie characters, religious figures.

Target Corp. sells jewelry phone charms at $18.99. Fly Fashions, Newcastle, Wash., sells phone charms that cost between $15 and aout $100. Sprint Nextel, Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, and T-Mobile USA all carry phone charms in their retail stores, charging as little as $5.

To ensure the company’s designer accessories keep up with the latest trends, Ms. Whalen, the product manager of Sprint, attended the recent New York Fashion Week. Sprint is planning to introduce a line of new accessories before Mother’s Day in April.

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