New phone morphs into multiple devices

February 7, 2008, 2:09 PM UTC

By Michal Lev-Ram

While most phonemakers are trying to cram more and more features into one must-have device, newcomer Modu is taking a different approach. The Israeli company is launching a tiny, lightweight cell phone (also called Modu, see left) which will fit inside multiple gadgets — including GPS devices, cameras, and even digital picture frames.

Here’s how it works: Modu, a domino-like GSM cell phone 7.8 millimeters thick, has basic calling functionality, but pop it into one of its “jackets” — a range of consumer electronics devices with a built-in slot for the phone — and it can take on multiple forms. For example, users will be able to put their Modu into a smartphone during the day to send and receive e-mail while on the go, but will then be able slide the small gadget into a more stylish, slim phone for after-work use, keeping the same phone number and single calling plan. Eventually, they’ll even be able to put Modu into navigation devices to access text messages and have calling capabilities straight from their handheld GPS unit. Or you might plug your Modu into a digital photo frame to download pictures from their device and use the frame as a speakerphone.

“We’re not into making one device that works for everyone,” says Dov Moran, the company’s founder. Most other companies have been trying to do just that — fit diverse features on one device. Nokia (NOK) makes a 5-megapixel cameraphone, while Garmin (GRMN) just announced it would launch a GPS device that also functions as a phone. But Moran argues that most of these devices don’t do all things well. And if they do, users usually have to pay a hefty price for them. Nokia’s N95, for example, costs upwards of $800.

Modu says its phone “jackets” will sell in the $40-$50 range. Right now the company has a few of its own prototypes out, but its success will at least partially rely on which consumer electronics makers it gets to sign up to make additional Modu-encasing devices. So far it’s managed to get Magellan and Blaupunkt as launch partners. It’s also signed on a few mobile operators, including Telecom Italia and Israel’s Cellcom, to distribute the phones. Modu phone itself is made by iPhone manufacturer Foxconn, and Moran says its recommended retail price is $300. Of course, if mobile operators decide to sell the phone on contract (which they most likely will), it will be cheaper or possibly even free. The company says Modu will be available in the U.S. in 2009.

Moran, who started Msystems — an Israeli company which was sold to memory card maker SanDisk (SNDK) for $1.6 billion in 2006 — has high hopes for Modu. The company has raised $20 million and Moran says he plans to raise another $100 million this year.