Analyst: LG Should Enjoy Its 'Prada' Premium While It Lasts

In a statement to BetaNews this afternoon, James McQuivey, professor of mass communication at Boston University and a former Forrester Research vice president, expressed skepticism that premium branding such as the Prada brand being attached to LG's top-of-the-line wireless phone, can be used as a profit driver for the company in the long term.

Earlier in the day, Prof. McQuivey released a statement to reporters admitting that fashion-conscious consumers will be interested in investing in Prada and similar brands this year, perhaps because the phone will be cheaper than some of the handbags they'll end up being carried in. But as he later warned, "CE makers want it because it's the last good way for manufacturers to charge consumers a premium."

That window of opportunity for a premium, McQuivey stated, will close once premium branding merges with mainstream users' uptake of phone customization - in other words, with snap-on skins and downloadable ringtones which in themselves have become veritable industries.

"Once today's Prada and Dolce & Gabbana trend moves a bit downmarket," he continued, "expect phones endorsed by TV shows and celebrities -- an American Idol phone that downloads custom ringtones from that week's show is not too far off. When Kevin Federline has his own line of phones that play his music, you will know the market has run its course."

Customization is marketed as a continual exercise in order for carriers to profit from it, so we asked McQuivey if the fashion-worthiness of a "Federline-Fone" won't wear off pretty quickly. "I completely agree, my K-Fed point was intended to demonstrate my cynicism that fashion can be a long-term driver of profit. It can't, except at the highest level, which is why you're seeing Prada and Dolce & Gabbana on these phones as an attempt to carve out a premium that might last more than six months."

By the latter, McQuivey is referring to a premium branding arrangement between Dolce & Gabbana and Motorola, which resulted in a sleek, brushed-gold version of its RAZR phone that incorporated the iTunes support of its ROKR phone. The D&G brand handset was released in limited numbers after being announced in December 2005.

There are similarities to this situation, McQuivey finds, in the credit card market. "For years, everyone was willing to pay extra to carry an American Express card because it gave you miles," he told BetaNews. "Now, you can get miles for free from any number of downscale credit card companies, so the cache is gone and the ability for AmEx to charge a premium has gone down as well. The same will be true for phones. But that's no reason for people at the low-end of the fashion and celebrity scene to not try to capture some short-term arbitrage before such celebrity ties are completely commoditized."

Does Apple's premium iPhone qualify as one of these upscale marketing efforts with a limited window of opportunity? Not really, believes McQuivey, because there are other factors that underlie the Apple iPhone.

"Apple's long-term key to success is that it's a fashionable gadget that has superior technology," he argued, "and therefore satisfies two urges with the same premium-priced product. And with an infinitely reconfigurable touch-screen on the iPhone, it can enhance its fashion quotient on the fly. Apple's on to something there."

Immediately after Apple's iPhone announcement at Macworld, McQuivey told reporters that we were witnessing nothing less than "the birth of the next Sony."