A $15,000 phone promises privacy for those who can afford it

In the wake of a growing debate about government surveillance and "back doors" into encrypted phones and other devices, a slew of smaller companies have emerged to compete with Apple and other tech giants by emphasizing their commitment to customers' privacy and security.

On Monday, a startup called Sirin Labs upped the ante, saying it would introduce in May a highly secure smartphone that runs on on Google's Android software that is two to three years ahead of the current technology available on the mass market – but at a steep price. The phone, known as "Solarin," will likely sell in the range of $10,000 to $15,000, the British-Israeli startup's president says.

In an era of ubiquitous electronic surveillance and security concerns, the phone raises anew Constitutional questions: Is privacy an inherent right or something now only available to an elite who can afford it? Will this phone (and others like it) widen the digital divide – providing cyber security for the wealthy – or could Solarin's success lead to improving smartphone technology overall in years to come? 

"I don't know that I would consider [the price] problematic partially because if this phone is the real deal and there are features to it that are a few years ahead of the curve, I think eventually those ideas will trickle down to the standard phones that the rest of us use," says Ross Schulman, senior policy counsel at the Washington-based Open Technology Institute.

Sirin Labs executives have likened the company's products to electric carmaker Tesla, noting the company is slowly rolling out more affordable options. Solarin could also potentially bridge the gap between phones designed for national defense and those for the business world, which still require access to consumer-friendly apps, they say.

For now, interested customers might consider the cost of the phone a relatively small price to pay compared to business information stolen by a hacker, co-founder and president, Moeshe Hogeg, told Reuters. 

Still the Solarin phone is far beyond the price of some existing highly secure alternatives and closer to the market for aerospace company Boeing's Black smartphone, which can self-destruct if it is tampered with and is sold exclusively to government and the defense industry. It remains to be seen just how much more high-end consumers would be willing to pay for a secure phone.

"Is there room for multiple price points? Absolutely," says Vic Hyder, chief strategy officer at Silent Circle, a secure communications company that sells a highly secure Android-based phone, the Blackphone 2, for $799. The Switzerland-based company, which also sells a secure-phone app that provides encryption to mainstream Android devices, sells primarily to government and business clients.

"It will all come down to their business model, are they able to sell enough to cover development and maintenance, making sure you have some inventory on hand.... I think one of the most critical pieces to security is the maintenance,” he says.

Sirin Labs, which has raised $72 million in private funds to launch the new phone, says it would be aimed at executives. The company will begin selling its first phones in May at a store in Mayfair, an exclusive neighborhood in London.

But there's another question – what do you get for nearly 20 times as much as a new iPhone 6s Plus?

"I don't think it's clear that it's the technology that these consumers are paying for," says Anna Lysyanskaya, a professor of computer science at Brown University.

"For people who are not experts, if you can afford to pay this much money, you can probably afford to have a dedicated professional set up your phone so it's harder to break into," she says, noting that the added cost could be from having a phone that has security settings – including cloud-based storage – configured by default so they are not easily hackable.

Recent events, including the legal battle between Apple and the FBI over breaking into the iPhone of one of the attackers in the San Bernardino, Calif., mass shooting and the ongoing conflict over US government surveillance, have led to a slew of products offered by both tech giants and smaller companies promising increased privacy. Secure messaging apps, including Wickr, Telegram, and the Facebook-owned WhatsApp, have particularly become popular.

And yet while more security features continue to expand on the mass-market level, companies should still continue to develop and market high-end security technology, Mr. Schulman says.

"You want emphasis on the consumer side, so you're steadily making advancements [in security] for your lower to mid-range price points, but at the same time have a couple companies out there doing crazy blue-sky stuff at higher price points," he says.

But for phones, a truly usable, consumer-friendly secure alternative would have to come from a large company such as Apple, says Professor Lysyanskaya. Currently, she says, services such as the company's iCloud storage platform, which isn't encrypted and can be hacked, serve to undermine the company's stated commitment to privacy.

"Apple has the ability to provide this to consumers and it's a missed opportunity. I think they are capable of creating this whole consumer-privacy-by-default paradigm," she says. "They can make a device that if you just turn it on it's secure. I don't think a luxury market oriented company can revolutionize consumer privacy."

Those privacy concerns also aren't going anywhere, says Silent Circle's Mr. Hyder.

"I feel that this is the wave of the future, that just like you don't own a Windows platform without some form of antivirus program, you don't have home without a lock on the door, you're going to have a need for some kind of secure communications," he says.

"It may not be for every call, but it's more and more difficult to find privacy these days, so you need some help, and that's what we're trying to do."