Adieu, Modu, We Hardly Knew Ye

Israeli handset maker Modu — which developed the concept of a super-light, super-small smartphones that can be customised with different outer “jackets” — is understood to be shutting down. In its heyday, the company had received at least $107 million in backing from investors that included Qualcomm (NSDQ: QCOM) and SanDisk.

Founded in 2007, Modu had developed phones that included a model based on Qualcomm’s Brew platform as well as a WiFi-only, Android-based device (pictured). The concept behind Modu was to develop pared-down, small handsets whose functionality could change depending on the outer case being used for it — for example, a music player or a navigation device.

In October 2010, the company announced a partnership with Micromax — India’s third-largest handset company in terms of sales according to IDC figures from June 2010 — to launch its modu T phone in the country. The modu T featured a Brew OS and was designed to run on 3.5G networks. Earlier in the year the company had also announced plans to sell its devices in other emerging markets such as Nigeria and Romania.

But it appears that having these deals in the can was not enough for the company’s creditors.

In November, Modu was understood to have cancelled an IPO and instead started to lay off most of its staff. Israeli newspaper Ynet, which first reported the news, says that remaining staff are there only to sell off existing stock. The company is understood to owe $123 million to creditors and investors.

We are contacting Modu for further details.

Dov Moran, the founder and head of Modu, owned about 35 percent of the company. Before Modu, Moran had founded msystems, which was sold to SanDisk (NSDQ: SNDK) for $1.6 billion.