Industry experts say Modu’s new cellphone is the world’s first modular phone.It was all the rage in the 1980s. Both Swatch and Gucci designed watches that were also popular fashion accessories. With interchangeable straps and dials, wearers could style their watches to match their wardrobe.

Today kicking off the 21st Century, an Israeli company Modu is not only going to primp your cellphone to give it style, it plans on giving you completely new functions. While the Apple iPhone created waves in the cellular phone industry last year, Modu aims to rip it wide open.

Modu has developed a new tiny cellphone that deploys interchangeable jackets stylized by high-end fashion designers. The heart of the device is a thin cellular phone about the size of a credit card.

By clipping on different casings you can give your phone a new look, each of the seven days of the week if you want, and new capabilities as well.

A range of jackets will let consumers transform the Modu phone into a music player, a messaging device, or even a game, said its founder Dov Moran. Jackets will eventually be sold in bookstores or at airports and come equipped with built-in features such as restaurant guides.

No news yet of sales in the US, but the company plans on a NASDAQ listing by 2009. Currently, the phone is slated for sale in Israel, Russia and Italy come this October. By January 2008, the phone will be able to connect to other electronics devices such as cameras, clocks or GPS systems, the company reports.

When Modu’s founder Moran talks, people listen. Before setting up Modu, Moran was the CEO of M-Systems, the Israeli inventor of the hugely popular USB flash drive, a tiny portable storage device. Under Moran’s leadership M-Systems was sold to international giant SanDisk, which is now one of Modu’s backers.

Moran believes that Modu can generate $1 billion by 2011 and compete with the cellular big wigs such as Nokia. He also stressed that Modu is not like any of the other top five cellphone manufacturers in the industry – all which make devices similar to one another. “We’re going to change the cellular market,” he said.

Ambitious? The company is hesitant to talk with the press, but has been revving its engine in the last months by way of a cryptic video. Talk by tech-lovers on forums and on blogs as to what the “Modu” was all about, generated an enormous buzz.

A version of the phone is now on display at the Mobile World Congress wireless show in Barcelona [starting Monday], where both potential investors and technophiles can see for themselves. Industry experts say it’s the world’s first modular phone.

Modu’s future plans are no longer a big secret. Sales partners on board already include Telecom Italia, Russia’s BeeLine (Vimpelcom), and Israel’s Cellcom Israel. Universal Music may develop its own jackets stylized for music lovers, the company has also reported.

Modu has been in business for about a year. It plans to raise about $250 million on the NASDAQ in 2009. The company has already raised eyebrows and about $20 million, including $5 million from SanDisk

The phone will be manufactured by Foxconn and will include chips made by Texas Instruments. Modu is based in Kfar Saba, was formerly known as InFone and employs about 100 people.

Like existing models in the cellphone industry, Modu expects the carriers to set the price of the device, but that it will either be free or very cheap, and come with a small selection of interchangeable jackets.

Modu’s transformer phone could very well give existing cell phone manufactures a run for their money. It might not turn into a “real” Transformer – an Autobot or Decepticon – but it might be much more than meets the eye.


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