[opendtv] Re: Samsung 100" display
- From: DISMO@xxxxxxx
- To: undisclosed-recipients: ;
- Date: Sun, 19 Dec 2004 01:32:55 EST
In a message dated 12/18/2004 6:16:13 A.M. Pacific Standard Time,
mcdonald@xxxxxxxxxxxx writes:
Remember that there are lots more rich people who can
spend on home gadgets than there are business bean
counters willing to pay for gadgets.
New Luxury Goods
Set Super-Wealthy
Apart From Pack
Rising Riches Stir Rivalry
For Ever-Bigger Yachts;
Waiting for a Maybach
An Echo of Louis XIV's Court
By ROBERT FRANK
Staff Reporter of THE WALL STREET JOURNAL
December 14, 2004; Page A1
FORT LAUDERDALE, Fla. -- Don Weston used to feel special cruising the world
in his 100-foot yacht. Yet on a recent morning at the International Boat Show
here, the retired Cincinnati businessman stood on his upper deck,
overshadowed by giants.
Next door was the Corrie Lynn, a 130-foot cruiser with a king-sized Jacuzzi,
five cabins, retractable plasma TV screens and twin jet skis. Down the dock
was the 197-foot Alfa Four, with an indoor gym, swimming pool and helicopter
pad. The talk of the show was billionaire Paul Allen's new pleasure boat,
Octopus, which extends over 400 feet and has a basketball court, music studio
and personal submarine. That's about to be topped by a yacht under
construction
in Dubai for a Saudi client. It's expected to exceed 500 feet, the size of a
small cruise ship. WALL STREET JOURNAL VIDEO
WSJ Reporter Robert Frank discusses the _new category of luxury goods_
(http://online.wsj.com/public/page/0,,8_0000-UhA9GOOFScdr1jWSAj5OJDhyph5wLkP8-NQ_6Sd
wNaO_duLK3fLxJJhI9fNsnmoAm,00.html?mod=ARTICLE_VIDEO) 1 America's
super-wealthy are buying to set themselves apart.
"I used to think I had a good-sized boat," sighs Mr. Weston. "Now it's like
a dinghy compared to these others. How big are they going to get?"
The yacht business reflects a new arms race breaking out among the wealthy.
With the population of millionaires soaring to more than two million in the
U.S., the rich are finding it harder to set themselves apart. Many are turning
to supersized luxury consumer products to rise above the pack. Today's
super-wealthy, and the companies that serve them, are creating a whole new
category of high-end products that are priced beyond the reach of mere
millionaires.
Megayachts have grown in size from a typical length of 80 feet to 110 feet
in the mid-1990s to well over 150 feet today. The market for luxury yachts has
more than tripled since 1997, with some boats costing well over $100
million. Dozens of boats longer than 200 feet are now under construction.
The most expensive Mercedes used to be the CL600, which cost about $100,000
in the late 1990s. Last year, the Mercedes group, part of DaimlerChrysler AG,
introduced the Maybach 62, which sells for more than $350,000. This year, it
started selling the SLR, which is priced at over $450,000 and has a long
waiting list. Not to be outdone, Volkswagen AG's Bugatti unit is about to
introduce a sports car priced at more than $1 million.
Watch makers Patek Philippe, Rolex and Breguet are selling watches priced at
more than $200,000, and limited-edition watches can now run in the millions.
The inflation rate for luxury goods reached 7% last year, more than twice
the overall U.S. inflation rate, according to a study conducted by Merrill
Lynch & Co. and the consulting firm Capgemini Group. The real rise isn't in
trinkets for the mass affluent such as handbags, clothes and shoes. It's in
the
big-ticket items for the wealthy.
Vacation-home prices in Aspen, Martha's Vineyard, Northern California and
other elite spots have doubled in recent years, real-estate agents say. Palm
Beach has become an island of billionaires, with financier Ron Perelman
recently selling his oceanfront estate there for more than $70 million.
Sotheby's and Christie's both topped $90 million in sales at their postwar
and contemporary art auctions this month, with only a handful of works selling
for less than $1 million. Racehorses are hitting prices not seen since the
mid-1980s, with one yearling recently selling at auction for more than $8
million.
The luxury boom stems from a huge increase in personal fortunes. The wealth
held by millionaires world-wide rose to $28.8 trillion as of the end of 2003,
according to a separate Capgemini-Merrill study, up 11% from $26 trillion in
2001. That's more than the annual gross domestic products of the U.S.,
Japan, Germany, France and the United Kingdom combined. Those at the very top
appear to be doing especially well recently. The wealth controlled by
individuals
in North America with more than $30 million in financial assets -- such as
stocks and bonds, but not including real estate -- jumped 45% to $3.04
trillion in 2003 from $2.1 trillion in 2002, according to Capgemini-Merrill.
A generally rising stock market over the past decade, soaring executive
compensation, higher real-estate values and lower taxes on the wealthy are all
cited as explanations for the rising wealth. Also, more and more entrepreneurs
who started family businesses after World War II are cashing out because of
industry consolidation, creating what private bankers like to call "major
liquidity events." Today's instant multimillionaires tend to be younger than
the
rich of the past, and more likely to splurge on lifestyle goods to
differentiate themselves from hoi polloi affluent people.
Edward N. Wolff, a professor of economics at New York University who studies
wealth, likens modern-day big spenders to nobles at the court of France's
Louis XIV, who reigned from 1643 to 1715. To ensure the nobles' loyalty, Louis
continually raised the "entry price" of being in his court, requiring them to
wear increasingly expensive clothes and keep larger and larger homes. The
nobles' need for greater wealth made them even more dependent on the king's
good graces, and left them less money to spend on arms.
Today, Mr. Wolff says, it's the wealthy themselves who are bidding up the
price of being on top. "For the wealthy to keep their status, they have to
compete in terms of luxury consumption," Mr. Wolff says. "The mere fact that
this
group can pay these prices becomes an indicator of social standing."
Of all the unnecessary purchases, yachts are among the hardest to justify.
Owners of a yacht -- generally defined as a vessel longer than 85 feet
registered for private use -- rarely use their boats more than a month or two a
year. Upkeep can cost millions of dollars a year, and yachts typically fall in
value after three or four years. A new paint job alone can cost more than
$100,000. What's more, international maritime law generally prohibits yacht
owners
from carrying more than 12 guests, excluding crew members, although some big
boats can get permission for 36 guests. That means a yacht can't host large
parties while cruising offshore.
Yachts do give their owners one important value: exclusivity. Norberto
Ferretti, chairman of the Ferretti Group, one the world's top yacht builders,
says
his customers like the privacy and freedom that comes with cruising on a
yacht. Entertaining guests on a yacht is "much more special than just bringing
them to your villa," he says. Best of all, yachts separate the seriously rich
from the merely well-off.
"Rich people can go to a beautiful hotel and pay $3,000 a night for a
suite," he says. "The trouble is, when you go down the elevator, you're in the
lobby with people who paid twenty times less. My clients don't like that."
Yet even yachts are becoming more mass-market. With cheaper,
composite-material hulls and mass-production techniques seeping into the
yachting world,
yacht builders can now crank out larger volumes. There are 257 orders for
"starter" yachts -- between 80 feet and 100 feet -- scheduled for 2005, up
from 139
in 2001, according to ShowBoats International, a magazine for yacht owners.
For yacht owners to feel special at the marina, they now have to have boats
of at least 200 feet, builders say. As of July 2004 there were 35 boats under
construction of over 200 feet, including five measuring 295 feet or more,
according to the magazine Yachts International.
Today's biggest yachts are loaded with new technology and toys.
Computer-controlled stabilizers -- which anticipate the rocking movements of a
boat and
offset them with underwater fins or gyroscopes -- make megayachts perfectly
still even when anchored. High-tech security systems, stereos, theaters and
swimming pools have become standard. Most come with garages, to house jet
skis,
motorcycles, small motorboats and other vehicles.
In the U.S., the yacht wars started when Leslie Wexner, chairman and chief
executive of Limited Brands Inc., built the 315-foot Limitless in 1997. The
ship has 3,000 feet of teak wood along with a gym.
Shortly after, Microsoft Corp. co-founder Paul Allen bought the 354-foot Le
Grand Bleu, which has its own 72-foot sailboat on board. Then he commissioned
Lürssen, the German builder of the world's largest yachts, to produce the
414-foot Octopus. It was planned to be the biggest yacht in the world.
Delivered last year, Octopus has a 59-foot speedboat, personal submarine,
swimming
pool and music studio, according to builders. The helicopter pad on the main
aft deck doubles as a basketball court. People familiar with the boat say it
cost more than $250 million to build and will cost more than $10 million a
year
to run.
Octopus, the 414-foot yacht owned by Microsoft co-founder Paul Allen, is
equipped with two helicopter pads, a basketball court, music studio and
submarine.
While Octopus was under construction, Larry Ellison, the hypercompetitive
Oracle Corp. chief who's also an avid boater, was building his own superboat.
It was originally slated to be 393 feet. As the building of Octopus proceeded,
Mr. Ellison expanded the size of his boat. The result, a 452-foot colossus
called Rising Sun, was launched this fall, making Mr. Ellison king of the heap
at least temporarily. The price tag was more than $200 million, people
familiar with the project say. Neither Mr. Allen nor Mr. Ellison will comment
on
their yachts.
Now, a Saudi family is building an even larger ship, according to yacht
builders and brokers. The boat, called Platinum, is expected to be about 525
feet
long. It's scheduled for launch next spring.
Yachts are even outgrowing the yacht builders. Until recently Azimut-Benetti
SpA, the world's top yacht builder, could build yachts up to only 230 feet.
With demand for larger boats so strong, the company last month announced a
joint venture with Fincantieri SpA, a cruise-ship builder, to meet the demand
for the new breed of megayachts.
Paolo Vitelli, Azimut-Benetti's chairman, says one of his clients ordered a
yacht and saw one of his business competitors with a larger boat. "He asked
us to make his one meter larger than his competitor's," Mr. Vitelli says.
Demand is so strong that some custom-ship builders are booked until 2006.
Since construction takes two or three years, a boat ordered today might not be
delivered until 2008 or 2009. Buyers who want a boat right away must pay a
steep premium for a finished new boat.
On a recent morning at the Fort Lauderdale boat show, Don Davis stepped
aboard Regency, his new 142-foot, three-deck motor yacht. With a touch of a
button, two giant sliding glass doors sprang open to the sprawling living
room.
The carpet is hand-knotted from wool and silk in China, according to crew
members. The bathrooms are fitted with Italian marble and the walls paneled
with
African Makore wood.
The grand stairway, sculpted from wrought iron and wood, spans three
flights. Retractable plasma television screens adorn almost every room, along
with
surround-sound speakers, audio players and amplifiers. Mr. Davis designed the
boat's X-shaped logo, which adorns the dining-room carpet and the formal
China. Just filling the gas tank costs more than $12,000.
Mr. Davis, a Texas businessman whose interests include real estate and car
dealerships, is selling Regency to build another yacht, perhaps even larger.
His asking price is $18.5 million, and he's already gotten five offers.
The size competition may be reaching its limits. The sudden proliferation of
big boats has led to a world-wide shortage of berths, or yacht parking
spots. Boats over 300 feet are too big for most marinas and have to anchor far
from shore or at cruise-ship terminals. Many of the supersized boats have been
dogged by cost overruns and quality troubles, builders say.
"One owner came to me just after buying a huge boat and wanted to sell it,"
says Henk de Vries, managing director of Feadship, a Dutch yacht builder. "He
said that when he stood on the deck, he felt too far from the water."
Write to Robert Frank at _robert.frank@xxxxxxxx (mailto:robert.frank@xxxxxxx)
2 URL for this article:
_http://online.wsj.com/article/0,,SB110297517061098911,00.html_
(http://online.wsj.com/article/0,,SB110297517061098911,00.html)
Strong Sales Seen for Luxury Goods
By CHRISTINA PASSARIELLO
DOW JONES NEWSWIRES
December 15, 2004
PARIS -- European luxury-goods companies could have a merry Christmas
shopping season, spreading a little cheer to the scrooge-like retail
environment.
Going into the critical Christmas season, luxury-goods products are
continuing to trump lower-end retail, as they have throughout the year. With a
spate
of new products, many at entry-level prices, goods like handbags, perfume and
jewelry will sell well world-wide, analysts say, and even the weak dollar
and a patchy tourism recovery won't spoil the season.
Luxury is a "winning sector" this year, Bain & Co. analyst Darrell Rigby in
New York says in his holiday spending report -- one of the few bright spots
in a Christmas period that will likely be "more 'ho-hum' than 'ho-ho-ho'."
Bottega Veneta, one of the brands in Paris-based Pinault-Printemps-Redoute
SA's Gucci Group division, is one of many luxury-goods brands forecasting
robust sales momentum will continue. "The holiday season shopping has shown
strong Bottega Veneta retail sales world-wide, and is expected to remain so
through Christmas," said Patrizio di Marco, chief executive of Bottega Veneta.
Cie. Financiere Richemont SA, Geneva, the watch and jewelry group that is
home to Cartier, last month predicted a strong pre-Christmas season. Analysts
say most luxury-goods participants share that optimism -- in contrast with
retail giants like Wal-Mart Stores Inc., Bentonville, Arkansas, which is
offering early promotions and heavy discounting in an effort to lure in
customers.
"Luxury goods are clearly outperforming the lower-end offering in the U.S.,"
says J.P. Morgan analyst Melanie Flouquet in London.
The pre-Christmas shopping period, running from around the U.S. Thanksgiving
Day holiday in late November to Christmas Eve, is the most critical season
for retail in general, including luxury goods. While the U.S. remains the home
of the commercial Christmas, analysts say year-end gift-giving is now
customary world-wide. Jewelry and watchmakers take in 20% to 30% of their
annual
revenue in pre-Christmas sales, says Claudia D'Arpizio, a luxury-goods
consultant at Bain in Rome.
Richemont's Cartier is one of the luxury brands that should have the best
Christmas, analysts say. Cartier has timed many of its new product launches in
the months running up to Christmas, such as its Santos 100 watch, which
arrived in stores in recent months and retails for £3,400, or about �4,900
($6,512). In addition, it is introducing more lower-price items, from leather
bags
and lighters to its Trinity jewelry line, which at around £585 for a gold
necklace is more accessible than Cartier diamond jewelry.
High demand for leather goods and accessories, other staples under the
Christmas tree, should add holiday shine to luxury groups. Bags and small
leather
accessories have among the highest margins in luxury, and a boost in sales
will result in a stronger operating margin.
For PPR's Gucci, the hottest products this Christmas are iconic items such
as the accessories collection using the Flora pattern from its archive. The
Florentine luxury label says its iconic products have registered a strong
sales
increase.
Analysts also have looked to a strong outlook from Coach Inc., New York, the
popular handbag maker, as an indication that the entire accessory sector
will perform well.
Watchmakers may have the best idea of Christmas performance because of their
reliance on wholesale. Analysts say one reason for Richemont's optimism is
their wholesale orders, which reveal demand weeks before Christmas.
Analysts even see a positive side to the weak dollar. While the sliding
dollar will undoubtedly shave some of the profit off European luxury goods
when
sales are translated back into euros, the weak dollar is becoming a travel
incentive for Europeans.
Americans are staying away from Europe as the euro becomes more expensive,
stunting a travel recovery. However, new tourism crowds are replacing them
with an appetite for luxury goods. Yet some companies will get coal in their
stockings. Analysts say Hermes International SA will miss out on the luxury
sector's merry Christmas because of delays in getting its ready-to-wear
collection into stores.
Write to Christina Passariello at _christina.passariello@xxxxxxxxxxxxx
(mailto:christina.passariello@xxxxxxxxxxxx) 1
URL for this article:
_http://online.wsj.com/article/0,,SB110306333305700132,00.html_
(http://online.wsj.com/article/0,,SB110306333305700132,00.html)
----------------------------------------------------------------------
You can UNSUBSCRIBE from the OpenDTV list in two ways:
- Using the UNSUBSCRIBE command in your user configuration settings at
FreeLists.org
- By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word
unsubscribe in the subject line.
Other related posts: