Modu has managed to convince a big customer that its snap-together phone design is pretty cool.
Today, Lynk Communications is announcing it will spend $38.5 million to buy Modu phones that it will use in the Philippines and other Southeast Asian countries. The announcement at the Mobile World Congress in Barcelona shows that Modu is getting some serious traction with its unique phone, which can be paired with a variety of modules to make all sorts of electronic devices. You slide the phone into one jacket (a stylish enclosure) and it becomes a digital camera with built-in connectivity, for example. Put it into another and it's a phone plus music player.
Modu has also signed on for a pilot test with Telefonica, which plans to test-market Modu-based phones in Mexico, Argentina, and Chile.
"We've moved from concept a year ago to a real product," Moran said.
Moran said that Modu's 220 employees design the phones and work with contract manufacturer Foxconn to build them. Then mobile phone makers or carriers, such as Lynk Communications, with its 235 million subscribers, buy the phones and sell them to customers. The phones offer a kind of universal platform for connected electronics, but Modu is billing the phones as an inexpensive way to let people customize their mobile experience at a time when they're pinching pennies.
Some of these schemes haven't worked in the past. Combination TVs with DVD players or VCRs built into them are a niche market because pairing two different things together like that rarely means that you are putting the best devices together. There is too much compromise in trying to bring down the costs. It's simply more efficient to buy a separate TV to go with a separate DVD player.
In the cell phone market, there is some precedent. Eric Engstrom, a former Microsoft engineer, founded Wildseed in 2000 to create phones with jackets that changed the style or function of the phone from something like a music-oriented phone to a game-oriented phone. That pretty much ended in failure after AOL bought Wildseed in 2005.
The phones have Texas Instruments chips in them and, according to Moran, a very small antenna that enables the tiny phone size. A second version, the Modu 2, will hit the market in 2010 with chips from Qualcomm.
The design stems from a belief that customization and personalization are what consumers crave. The Kfar-Saba, Israel, company is unique among phone designers and is one of the highest-flying mobile startups, with $85 million in funding. Moran, the inventor of the universal serial bus flash memory drive, founded the company in 2007.
Moran said he is targeting $100 million in revenues in 2009 as more carriers roll out phones in a variety of regions. The phone is expected to hit the U.S. and Japanese markets in 2010. Here's a video of how the modules work.