The sleepy town of West Linn, Oregon, 20 miles south of Portland, is not the most obvious spot for a superluxury product to break out. But that’s where Alex Wiley tinkers away in his 2,800-square-foot workshop.

“Originally, I started working with customizing cars, but computers are a lot smaller and easier to work with,” says Wiley, a self-proclaimed geek who has made a name in the very narrow niche of case modding—turning monitors and hard drives into works of art. His results have been praised in numerous blogs and magazines, including Tech Edge and Computer Gaming World. But it wasn’t until October that Wiley struck gold.

That’s when Wiley put the world’s first gold-plated laptop up for sale. It was a MacBook Pro covered in 24-karat gold with an Apple logo paved with 2.5 carats of diamonds. Since he posted pictures of the first model on the website of his business, Computer Choppers, Wiley says he’s gotten calls from The Tyra Banks Show, Bloomingdale’s, and potential customers in Denmark, Saudi Arabia, and Hong Kong. The machine, priced at $8,500, sold within a week to a customer in Japan; eight more foreign orders followed.

“You don’t have enough technology that’s worth a million or even worth $100,000,” Wiley says. But precious stones and metals are a different story. In the past couple years, tech and luxury-goods firms large and small have unveiled a plethora of lavishly embellished products. This year saw not just the launch of the iPhone, but a $40,000 diamond-covered version of it by London designer Alexander Amosu. British luxury-goods purveyor Luvaglio is touting a $1 million laptop. Swiss kitsch-tech designer Pat Says Now has a white-gold computer mouse that comes studded with 59 brilliant-cut diamonds.

Is there really a market for blinged-out gadgets, especially those that share the same basic technology as the plain-Jane versions? Wiley’s experience indicates there is, though it’s hard to grasp how deep—or, perhaps more appropriately, shallow—it is. “It’s more of the ego—who has the biggest yacht, helicopters, whose watch does what. It’s about that more than anything else—an accessory for the superrich,” Amosu says. When you buy one of his phones, he says, “you’re getting something that’s going to make your friends envious all day long.”

Sophisticated technology gets more affordable by the year, if not the month, making it difficult for the status-conscious to stand out from the crowd. “Eighty percent of households and consumers in the U.S. buy new technology each year,” says Shawn Dubravac, an economist for the Consumer Electronics Association, a trade organization comprising more than 2,000 consumer tech firms. The market for technology is big enough—and American incomes are high enough—that a luxury niche has been able to develop, he says.
 
Milton Pedraza, C.E.O. of the Luxury Institute, a New York research firm, sees no product breakthrough with these items. “All it has are jewels, and frankly, anyone can do that with a computer,” he says. But for the companies that make these computers, the gold and gems are more than mere frivolities—they’re moves to generate buzz, which would make them worthwhile, even if nobody buys a diamond-studded television.

Not many people, for example, had heard of Luvaglio until news of its million-dollar laptop made its way around the blogosphere. As for Amosu, the buzz around his $40,000 diamond iPhone has boosted sales for his more affordable golden iPod, which retails at just under $1,000. He has sold nearly 7,000 of them since April. “Everyone wants to emulate the rich and successful,” Amosu says. “If somebody is famous and buys a $40,000 iPhone, people will want to buy similar phones as a status symbol.”

Wiley, who made his gold-plated laptop to satisfy his own love of design, says that the luxe-tech market is only about creating a buzz when it comes to things like Luvaglio’s laptop or luxury-accessory designer Peter Aloisson’s $1.3 million Diamond Crypto Smartphone, which is encrusted with 50 diamonds.

For Frank Nuovo, creator of and chief designer for Nokia’s luxury-cell-phone company, Vertu, developing a decadent product has little to do with buzz or trickle-down sales. “Vertu was created not as a marketing concept, but for me personally, as a passion, as a means to express the ultimate mobile-phone device crafted like a Ferrari,” he says. Launched in 2002, Vertu was inspired by the precision and craftsmanship of watchmaking. “It was so blatantly obvious to me that mobile phones were going to take this path. Everything else that is made by man that serves a function has turned into an art,” Nuovo says.