Modu - convergence game-changer?

Thursday, May 8, 2008

Mobile convergence is a recurrent theme in this blog. As I continue my journey to understand the mobile value chain, disruptive trends are often brought to my attention. Recently, I was introduced to the Modu – the world’s smallest and first modular phone.

Let me start by saying Modu impresses me. You can read more about the concept from the company’s website here. As I think through it, more and more ideas pop out. I will pen a few hoping that this can initiate a discussion.

Firstly, while I think convergence is the future, customization has the potential to drive it in the emerging markets. If the feature-set is not available at a reasonable cost, allowing the user to choose a subset for the cost he is willing to shell out makes a compelling business case. While modularity is not my favorite approach to customization, it is an interesting one at that.

Secondly, the idea is simple, yet creative. Once you have the basic phone sold (with or without carrier support), the so-called jackets are consumer electronic gadgets that you can pick off the shelves of your favorite store. The product also helps CE manufacturers who risk being marginalized because they neither have the scale nor time to incorporate mobile phone capabilities in their devices. It is easy to conceptualize a modu transformer slot.

The idea is not without its drawbacks. The concept of changing jackets to suit your needs may be unattractive to a good portion of the consumers. While I like choice, my personal preference will be to go for my feature-set in a single device. For example, let us say that on a particular day I have the music player jacket. What if I have to make an unannounced trip that necessitates the GPS jacket that I don’t have handy? Perhaps, I am very utility-driven. But I am sure I am not alone here.

Not surprisingly, Modu’s PR machinery is focusing on the ‘coolness’ factor. The primary target audience is the young iPod-loving generation. In the emerging markets where cost is a factor, the pricing strategy can help this concept click.

That being said, there are two things to be kept in mind here. Firstly, the emerging markets will have a bifurcated user-base with the utilitarian user on one side and the younger gadget-loving crowd on the other. Secondly, in a country like India, the consumer is heavily brand and status-driven. It is important for Modu to ensure appropriate branding to compete with the Nokia handsets that dominate the market. At the same time, the aggressive pricing strategy should not cast aspersions on Modu’s quality or value.

Also, convergence will be driven by the user experience. So, the question in my mind is whether the jackets will match the UI, applications and the ease-of-use that have been the differentiators for some of the most successful mobile CE products. The pricing also makes me wonder about Modu’s abilities on this front.

In summary, Modu is a very interesting concept that adds a dimension to convergence, ironically through a divergent set of jackets. So far, the Israeli startup has impressed me with its ideas and moves. It remains to be seen whether the company’s marketing department understands its competitors’ moves and the pulse of the markets it is targeting. It is important that the company executes on its product launch well by striking a balance between cost and performance, the very conundrum that drives the growth rate of the wireless market at all levels world-wide.

Posted by Vijay Nagarajan at 10:00 PM  


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