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WMC. Modu – it is different

The World Mobile Congress brought only three products that can shake up the mobile phone market both in the short and long terms. Specifically, the world’s first modular handset, along with the concept behind this solution, was rolled out by Modu, an Israeli start-up company. Standing behind it is the founder of Msystems, Dov Moran, whose invention is all around us, although you may not know what it is. Over a lengthy period of time he was into development of various data storage systems, flash-memory in particular. For example, such an ordinary thing as USB memory came along thanks to his effort. Then Msystems was sold to SanDisk for 1.6 billion dollars. And today Moran makes another attempt to look at everyday things at a different angle.

The company’s name “modu” originates from “modular”, which is, in fact, what the whole concept is all about. On top of that, they have made up a couple of other meanings to this word – see the banner below.

The idea in itself seems very straightforward and unsophisticated. Buying a new handset we always get a radio module along with it, and it is not a rare occasion when within one and the same device generation it remains the same, even though we have no idea about that. It turns out, that consumers have to pay twice for the thing they seemingly already own. On the other hand, the mobile phone is an end-product, so you can’t tear some parts out of it in order to use them in other gadgets over again. The idea behind modu’s offering is right on the surface – to bring the core with the radio module embedded into it, and then tack other features and feats on top of it, lending it the looks of a conventional phone.

How does it work in practice? First, there is the modu phone itself, or, more precisely, the core module with cellular radio onboard. The maker decided to go after visual appeal and cut a dash with this phone. The thing is, PR is utterly essential for a start-up, and frequently common sense takes a back seat in order to make way for fancy looks. That’s the case with the modu phone as well, as its core module is in fact the world’s tiniest handset. It is smaller than a credit card, although retaining a slightly fatter profile, and weighs around 40 grams. This bare module packs in a display, so that you can see who is calling, read messages and even reply to them. It turns out to be a pretty much stand-alone handset that even allows you to make calls hands down. On the downside, it has no vibro or standard call alert, meaning that should you overlook a notification on inbound call displayed on the screen – rest assured, you have just missed a call. To my mind, had they made it a tad bigger, added a loudspeaker, they would have gained more than with the handset’s present design; however in that case they would have lost the much coveted title of the world’s most diminutive handset. Modu opted for PR and hype around its first product.

This svelte module houses 1 Gb of memory than can be used for storing music, photos and data. The modu phone taps into GSM850/900/1800/1900 networks and supports GPRS, running on a single-chip TI’s solution. As of today, there are no modules boasting support for EDGE, nevertheless, they will come along down the road, as well as 3G-enabled chips.

The bundled software is no bells and whistles – phone book, call log, image viewer, though the latter doesn’t seem to be particularly fitting for the handset’s baby display. The module will also sport some games, which are currently absent from prototypes. The core module will be manufactured by Foxconn.

The modu phone runs on Nucleos OS; they are also thinking of supporting developers and creating an SDK for the core module. As of today it is available only for the maker’s own developers.

Synchronization with PC will run via a data cable employing modu’s proprietary socket, which is in effect the heart of the whole system. It is exactly the interface socket that allows the user to attach so-called “jackets” or “mates” to the core module – effectively, these two device types inject life into the concept.

What’s the best thing about modu jackets? On the face of it, these are conventional mobile phones sporting a slot for modu’s core module; after installing it inside you will see the jacket’s screen blink, indicating that the combo-phone is ready to work. Basically, there are no specific price-brackets set for modu jackets, for in fact you buy not a handset per se, but a shell for the modu phone, that will comprise the bulk of your expenses. However depending on each jacket’s focus, it may come with stand-alone memory, memory card slot, bigger display, any type of keypad and extra connectivity options (such as Bluetooth and WiFi) – long story short, any thing you can only think of. Moreover, its price tag will always remain below a similarly packed stand-alone handset. At any rate, that's what they claim today.

So as to emphasize the beauty of having modu jackets under your belt, the company plans to ship the modu boxed with two jackets. This package should retail for around 200 Euro in Europe, while jackets will be available separately for 60 Euro or so. Again, don’t forget that its price will largely depend on what it will have under the hood.

While the concept of the modular handset looks fetching, the most important thing is that from now on, the process of bringing a new phone turns into a child’s game for many companies. No longer do they need to design the entire phone, elaborate its cellular radio and then certify it. Effectively, all they have to do now is buy a chipset and interface from modu and them come up with a device other own. There is a potential market for such solutions, so let’s see how the maker is going to handle it.

By default all jackets will come with built-in batteries, since the core module’s cell is quite diminutive and as the manufacturer claims, will be good for around 100 hours of standby and 2.5 hours of talk time. The prototypes that I managed to get my hands on had half of the cell’s charge used up after 30 minutes of playing around with the phone. That’s where we come across first pitfalls – the core module, while being a phone, can’t be considered a stand-alone solution, since in order to use it effectively the user will need a jacket.

On the other hand, jackets’ low price makes them ideal for distributing… content. For instance, you can get a new album of your favorite band for as little as 18-25 Euro in the form of a nicely outfitted jacket boasting the band’s logo and styling on the casing. You don’t need me to tell you that the use might find this interesting. In fact, this very opportunity got the attention of Universal Music, which is currently studying this product. Other possible applications for jackets include city tours, yellow pages, encyclopedias or any other thing they want. What is more, all jackets serving different purposes can have unique menu interfaces, for it is modified by jacket makers. By the way, the company’s representatives talked a lot about how simple it was to create personalized menus on PCs, and how straightforward and intuitive the tool kit is. We have no reason to doubt that – indeed, it will be more about your motivation to resdesign the default menu to your liking. On the other hand, similar things can be done with all handsets currently available on the market, but few people really take advantage is them.

So far our story about modu has sounded as if taken from a fairy tale, but it is about time we added a drop of poison to it. Low price of jackets results in low-end materials used in them and poor quality. And as soon as they get it to the level of the top three phone makers, the prices will skyrocket correspondingly. So, it turns out that modu won’t be price competitive – on the contrary, it will go for just as much or even more money. Many consumers view ergonomics and looks as one of the most crucial qualities of their phones, and they will accept no compromise. Given the lack of designers, engineers and specialists in the field of materials in modu’s team, this aspect of their brand-new phone appears to be on the weak side. It’d be great to flood the market with jackets coming in all types of form-factors and arrays of technologies onboard, but will consumers pick them in view of their plastic quality being inferior to the competition? I suppose the answer is pretty much clear-cut.

But, we got carried away by modu’s jackets and apparently, we completely forgot about modu mates. As you probably have guessed, the “mates” are nothing but external accessories like GPS, car audio (that will allow you to listen to music by plugging the core module into it and receive calls with your in-car stereo system), sporty accessories and many others.

That said, modu’s universe will comprise two different device types - jackets and mates. Both will be relatively cheap and appealing.

Now let’s try to see what the future might hold for modu these days. I see this start-up as an attempt to pick up speed out of the gate and then sell the idea to someone. The connections the company’s founder has have allowed him to make things work his ways, create a working prototype and attract tech-savvy companies like SanDisk, TI and Israeli telecom. Total investments have accounted for around 20 million dollars, with 5 millions coming from SanDisk’s camp. Over the months to come the maker hopes to get 30 millions more, and get to the level of 100 million dollars worth of investments by the end of 2008. Keeping in minds that it employs only 100 men, give or take, these numbers seem pretty decent.

Modu is banking on PR these days, and has come pretty far in this sense – at WMC journalists were met by the company’s top managers in person, who showcased the handset itself and talked about their plans. One of those managers proudly reported that the exhibition allowed them to make 186 headlines on the first day alone, which is a huge number. In my opinion, that’s the right thing to do, as creating the concept of modular phones isn’t quite enough – they also need to bring it to the market and get to the average consumer’s (and investor’s too) mind with it.

Is the modu phone all set to take over the market today? Definitely not, it is more like a first go at this concept, nothing more than that. They still have plenty of time before September to design more jackets and work on their quality, throw away cheap earphones out of the box and replace them with something newsworthy. So far, a couple of companies have already expressed their interest in this product; and one of them was none other than VympelCom. Skimming through the press-release on modu’s cooperation with Beeline I caught myself thinking that the whole document was very sound: huge region, enormous audience, great opportunities. The only thing the authors omitted was that Beeline, much like other Russian operators, has never had knack for selling mobile phones – not only does it do that awfully, they can’t do that on their own either. Hence the forecast that in 2008 the maker will be able ship 10-15 thousand units at best. And these are only early estimates – modu’s team arrives in Moscow some time in March to get a better picture, and I suppose, that’s when they can change their mind in a big way, towards smaller shipments volume. I don’t think that other markets are much different, since no carrier will ever buy an unknown pioneer device in large quantities. If only the maker doesn’t start giving it away for free, which is very unlikely.

Wrapping it all up, I would like to add that I spent a lot of time discussing this product with many people – distributors, operators, journalists. What we agree on, is that as far as the product’s idea is concerned, the modu phone looks extremely fetching; the original implementation is not without some glitches, but they still have time to amend most of them. The project’s fate will be decided already this year – it may turn into a major revolution that will inevitably change the paradigm on the market, or perish and become a mere “the first modular phone ever” in the history books. Anyhow, they have made a serious statement with the modu phone – we will have an eyeball on this project and report on how it turns out.