modu Starts a Significant Co-Operation with Telecom Italia, the Largest Telecommunication Operator in Italy

KFAR-SABA, Israel (Business Wire EON) February 7, 2008 -- modu has developed a personalized mobile phone concept that allows customers to use a slimmed down, standalone mobile phone (the modu) that can be enclosed in an endless variety of modu jackets and modu mates to reflect the customer's mood, personality, tastes and need for functionality.

The modu jackets and modu mates will allow unlimited variations: they could have the appearance of a standard phone (slider, clam, etc), but may assume new guises as other brands (fashion, sport, lifestyle) join the modu revolution and design modu jackets and modu mates of their own, in addition to the products modu itself will be manufacturing.

The modu concept frees consumers from the constraints of static, inflexible and outdated handsets, redefining the market and opening it up to new entrants from outside the mobile world. The modu approach - a world first - is aimed at giving consumers greater choice and flexibility in the way they buy mobile phones, as well as making personal communications more personal, varied and fun.

For operators, the benefits are numerous: modu's business model means operators now have an additional opportunity to engage in a positive dialogue with their subscribers by offering them a wider and more appealing choice of handset models and styles; they can also create and build new communities and segments among their subscriber base, leading to increased usage, additional handsets, greater loyalty and reduced churn.

modu has announced that a wide range of mobile products, including a range of modu jackets, are scheduled to be commercially available later this year.

Dov Moran, Founder and Chief Executive Officer of modu, said: "This co-operation with Telecom Italia is a milestone for modu, and is among the first of a number of such deals we are negotiating with prominent mobile network operators as the modu revolution takes off.

"We have found in our discussions with operators that they are keen to embrace exciting new concepts. As soon as they see what modu has to offer, they want to partner with us because we represent a solution to a problem that has been challenging them for some time: how to refresh and revitalize the subscriber experience. modu helps them do that in a meaningful way.

"modu is all about making new connections, and the co-operation with Telecom Italia helps us achieve that goal. We are delighted that Telecom Italia shares our passion and our vision. It has been a pleasure working with the Telecom Italia management team to align our respective strategies around this co-operation, and we look forward to this bearing fruit over the coming months."

According to Leo Tranquilli, VP Handsets of Telecom Italia, modu's product concept is in line with Telecom Italia's innovation trends, in that it enables the success of innovative services through the enrichment of the customer experience. Telecom Italia's innovation leverages on the launch of very innovative and specialized products, which improve the overall experience of the customer, increase VAS ARPU and high-value customers' loyalty.

Paolo Paganucci, VP Scouting & Benchmarking of Telecom Italia, adds: "The industry abounds with success stories in which a specific application (for example e-mail, GPS navigation, music on the move, etc.) is identified with the vertical device. On the other hand, operators' and customers' dreams of the "Swiss army knife" handset is currently a letdown from the perspective of the customer experience especially on innovative services.

The collaboration with modu goes in the direction of overcoming this dichotomy, thanks to a new paradigm which gives the possibility to change the customer experience of the service without changing the device. The customer will be able to choose the preferred ergonomics and functionality that best suits his needs in any particular moment and context."

The cooperation with Telecom Italia is the first in a line of deals modu is negotiating with leading global mobile network operators (MNOs) in other countries to ensure that the modu platform achieves widespread penetration and user uptake once products are available in the fourth quarter of 2008.

NOTES TO EDITORS

About modu

www.modumobile.com

modu was established by Dov Moran and several of his colleagues from msystems, a company he founded and sold to SanDisk in 2006 for $1.6B. modu's vision is to bring a fundamental change to the dynamics of the mobile phone industry. The company is dedicated to developing products, technologies, a wide ecosystem and business relationships that will help realize that ambition. modu will have its official launch at the Mobile World Congress, being held in Barcelona, Spain in February 2008.

modu gives users the freedom to choose a new phone as often as they like, meeting their changing needs, preferences and style- easily and affordably. At the heart of the modu ecosystem is modu - a tiny and sophisticated mobile phone. modu can be slipped into a wide variety of modu jackets - stylish phone enclosures that enable users to create a new look or design and provide added functionality. modu can also slip into modu mates- consumer electronic devices that are modu-enabled - allowing users to create an entirely new communication experience.