Fashionably Connected; The new Prada Phone isn't the first high-fashion mobile, but it shows how eager manufacturers have become for their next hit.

Byline: B.J. Lee and Barbie Nadeau (With Kenzie Burchell in London)

Prada doesn't take cell phones lightly. Although the gadgets have long been considered fashion accessories, the Milan-based company, known for its clothes, handbags and shoes, has stayed out of the business because of all the ugly hardware--the buttons, knobs, switches and keypads--which screams "utilitarian," a quality no fashion house wants its brand associated with. But about a year ago, Prada found that LG's touch-screen technology has gotten good enough to replace the unsightly protuberances altogether.

The result of that yearlong collaboration is the Prada Phone, a slim, smooth and sleek device due out in Europe later this month for a whopping $780. Prada executives don't want you to think for a minute that the Prada Phone is just another phone that looks good on the ear, like Samsung's E500 Versus, a Versace-branded clamshell, or the Dolce & Gabbana numbered limited edition Gold Phone V3i, or any of many fashion-branded cell phones introduced in the past year. "This is the result of almost one year of collaboration between Prada and LG to present a touch-screen phone with a particularly large screen, in association with a style of advertising and packaging that represent something 'never seen before' for the industry," says Giacomo Ovidi, head of new business development at Prada Group.

As the global cell-phone market heats up, manufacturers have gotten more desperate than ever for the next big hit. They're anxious to avoid the troubles of Motorola, whose financial fortunes soared after the success of its Razr phone and are now sagging as the company struggles to find a new winner. Apple's iPhone--introduced in January but not available until June--is also creating a buzz of insecurity among established phone makers. The global top five--Nokia, Motorola, Samsung, Sony Ericsson and LG--have kept their market shares steady in the past year, but analysts warn they could easily fall if the iPhone or some other challenger takes off. "The market has been so saturated that companies have to create new demands," says Sam Hahn, a technology analyst at Samsung Securities in Seoul. "That is why design matters so much."

To add to the uncertainty, marketers are targeting a new type of consumer in the mobile marketplace: teenagers and youths, who tend to care less about technology than holding the latest must-have phone. To address this market, handset makers need to "appeal more to the heart than to the head," says Steve Walker, vice president of Sony Ericsson marketing. "You just want to have them, you want to own them, you fall in love with them, irrespective of what they can do, or even what the price is. You are confident from just the looks that you need to have that device."

As advanced technologies ...