Tiny, Packed Handset Seeks Large Carrier for Fun, Profit

Neonode makes a tiny, gesture-driven GSM handset called the Neonode N2 that’s sexy and intuitive. Released five years after the N1 prototype, it packs rich multimedia capabilities, huge storage, and a unique navigation model consisting of thumb sweeps into an ergonomically satisfying design. And it’s made an impressive investment in CES real estate, as it’s now seeking partners to bring the N2 to North America.
Even though Neonode only makes one device, it has a necessarily wide variety of business models. That’s what you have to do if you’re a small player trying to grow despite the Byzantine regulations and regional licensing of wireless carriers.

In its native Sweden, the N2 is sold — locked — through wireless carrier Telenor. In other countries, it sells through a distributor, such as in Greece, where distributor MyPhone has been selling it, unlocked, since August of 2007. Where Neonode doesn’t have distributors — and where the laws allow it — it sells the phone through an online store. The company also licenses its patented technology, which includes an IR grid touchscreen and a user interface, to third parties worldwide.
Daniel Stålbo, marketing director for the firm, thinks Apple’s iPhone opened the door for gesture-based devices and that Neonode can succeed now that carriers are looking for new kinds of phones. As for consumer demand for features like music stores, Stålbo believes that the Internet is already very open and a music store is simply a “layered service that is already there.” Certainly, with offerings like Amazon’s DRM-free music purchases available, handset devices can compete more effectively with iTunes than before.
Now Neonode is looking for a U.S. suitor. Stålbo will only say that they have “started discussions” with interested parties. As for other features like Wi-Fi and Skype, Neonode says that will depend on their partners.