Modu: phone morphing might burn millions of Dov Moran’s dollars

Our Next Web Tipr in Israel, Yaniv Solnik, is a great guy. He sends us many tips and is generally very nice. Today however, he seems a bit angry. He’s talking about an Israeli company that is ‘bound to crash big time and make many investors loose their money’. What’s going on here?

Yaniv discusses Modu, a very ambitious venture that has developed a mobile phone that consists of one smart CPU and many totally different and good-looking covers – or jackets. So these three different-looking phones have the same CPU with all their personal and mobile info stored on it:

It’s an idea of the well known and successful entrepreneur Dov Moran. Before Modu, he was the founder, Chairman and CEO of msystems. A company that invented USB Flash Drive and FlashDisk amongst other things. From scratch, Moran build a 1 billion dollar company in 18 years. It was acquired by Sandisk for 1.6 billion dollars. So to say the least, Moran has an impressive track record.

That probably helped when he was looking for some funding. So far he has received investment funding from SanDisk, Genesis Capital, and Gemini Capital Fund Management totaling 20 million dollars. Moran hopes to secure another $100 million this year and he probably will. He’ll start selling his product in October with three service providers in Russia, Italy and Israel.

So the investors really fancy his phone-morphing idea. It doesn’t really surprise me, since it’s a trendy product that looks astonishing. And of course, the business model is also pretty simple: Moran expects consumers to keep buying new jackets. Yet isn’t the product launch five years too late? The mobile world is raving about new smart phones, the iPhone and the all-in-one Nokia N95. Why would people walk around with these little and cheap devices?

Dov Moran

Moreover, according to my loyal WebTipr, this is not the first time that an Israeli company is trying to pull this kind of mobile centric device. “A quick look at IXI Mobile, another Israeli venture that burned millions trying to do the exact same thing with a bluetooth centric device, gave up long time ago and is now focusing on a ‘smartphone for kids’ named Ogo.”

While we are being very negative here, Mr. Moran himself thinks he’s working on a revolution. “It’s not like the top five companies where everybody makes devices similar to the others, we’re going to change the cellular market,” he said to Reuters. Guess I would say the same thing when I was in it for 5 million dollars.

[WebTipr: Yaniv Solnik, Israel]