Tiny Phone Module from Modu

Modu, an Israeli startup company, has contracted with three mobile phone carriers to sell the tiny mobile module called Modu. The Modu is a micro cell phone that pops into interchangeable jackets or into other devices that want to connect to the Internet. The Modu will be launched on October 1 of this year with the help of Telecom Italia Spa in Italy, OAA Vimpel Communications in Russia, and Cellcom Israel Ltd.

Telecom Italia Mobile and Cellcom are the largest cellphone carriers in Italy and Israel, while VimpleCom is the second largest service provider in Russia. All three companies are hoping Modu’s versatility catches on in the telecommunications market.

The Modu weighs 1.5 ounces and is smaller that an iPod Nano. It has a small color screen and a limited keypad. The device can be used on its own as a mobile phone but is able to plug into jackets and other devices to make the Modu more than a rudimentary phone.

Different jackets can be bought that will make the Modu look and work like standard cellphones. Modu founder Dov Moran said that the Italian carrier is excited about the concept because it can make cell phones more like fashion, tempting consumers to update their looks every few months.

“This allows you to make a summer collection and a winter collection,” Moran said.

“The carriers really are interested in having more and more customers coming through their stores, rather than signing up and coming every two years to sign a new contract and get a new phone,” said Daniel Amir, a chip analyst at Lazard Capital Markets in San Francisco. He called the Modu a potential “game changer” in the cell-phone industry.

The first Modu only uses General Packet Radio Service, or GPRS, for data transfer. While GPRS is widely deployed, it is a slow technology which is similar to dial-up speed. Moran said his company is working on upgrading Modu to use High-Speed Download Packet Access, a 3G (third generation) technology used by AT&T and others.

Modu hasn’t talked to any U.S. carriers yet. Moran said he expects Modu to talk with American carriers in the hope to launch the phone in 2009 at the earliest.

Modu isn’t the only mobile phone manufacturer looking at the module concept. Sony Ericsson has a patent on a modular phone, but Modu is the furthest along in its plan and has support from large carriers.