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Laid out like an actual apartment, the chic Soho boutique The Apartment offers stylish wares ranging from a $20 Swedish butter knife to a $5,000 papier-mâché desk. For Geoff Pitfield, the 28-year-old CEO and co-founder of Scout Electromedia, The Apartment is the perfect place to hawk his company's stylish, Jupiter-hued Modo electronic accessory as the next must-have toy of hipster urbanites.
First launched in New York City in mid-September, Modo is a cross between a pager and a Palm handheld that proffers an opinionated look at restaurants, music, movies, and shopping penned by local editorial staffers to target the 50 million U.S. city dwellers between the ages of 18 and 34. The company believes the content offers an advantage over competing wireless-content companies such as Vindigo, AvantGo, and Go2.Online. Those services rely on third-party content and don't sell their own devices. The $95 purchase price gets Modo buyers a mouse-sized device and free lifetime access to regularly updated information ranging from overheard club conversations to ratings of vintage-clothing stores.
Half pager, half Palm, Modo offers reviews of eateries, movies, music and more to young urbanites
A hipster himself, Pitfield hopes his combination of hardware sales and proprietary content will tap into a wireless market for advertising, transactions, and subscriptions that Kelsey Group consultants figure could grow to $16.9 billion by 2005, from $210 million in annual revenues today. Pitfield managed to snag $18 million in venture capital in May, before the latest Internet downturn gained momentum. "We are simply a digital magazine, and we are following that business model," he says.
ANTI-PDA. But Modo faces considerable obstacles as a long-term business. Companies selling cool are often short-lived and vulnerable to the fickle tastes of their target demographic. And whether Modo sells remains an open question. "Modo could even be considered training wheels for a PalmPilot," says Bruce Kasrel, a senior analyst at Forrester Research. "But a custom device for a single application might be a tough sell -- unless, of course, it's free." A freebie isn't yet in the cards, but Pitfield claims he would love to drop the price further.
The pet project of three Stanford-trained product designers, Modo has been positioned as the easy-to-use anti-personal digital assistant (PDA). "Less than 1% of Americans have a PDA," says Pitfield. "Even then, it's hard to find one device that does it all and does it well." A former designer of underwater video equipment, Pitfield teamed in January, 1999, with William Cockrayne, formerly of DaimlerChrysler, and Daniel Bomze from hot design shop IDEO.
They quickly built a working prototype that stores two gigabytes of information and has just four buttons, making the intuitive navigation interface easier to use than Web-enabled cell phones. Each night, the company automatically updates each Modo via a low-frequency pager network, making it a nearly zero-maintenance device. To nurture the image that Modo is not a techie toy, Pitfield vows to keep Modo out of electronics stores. Scout sells the device only on the company's Web site, in Virgin Megastores, and in high-end boutiques.
EDGY ADS. Competitors give Modo style points but note that the rigid platform could have limitations. "Modo's pager-based solution is very elegant, but it doesn't allow for two-way communication or personalized service," says Vindigo CEO Jason Devitt. And of late, wireless-content companies may have lost their cachet. AvantGo, which went public in late September, has over 1 million users, but the company managed to lose $18 million from January to June of this year, on revenues of $5.1 million. After a hot initial public offering, the company's stock has fallen from $27 to $12 and shows no signs of recovering.
Still, the number of digital-wireless subscribers is expected to quadruple to more than 800 million by 2003, according to research consultancy Dataquest. "Very few people in America have wireless Web access, and Modo might be able to take advantage of this," says Robin Hearn, a senior analyst at telecom consultancy Ovum.
Modo has already made a big splash with an edgy ad campaign featuring sushi-eating, fashion-forward Modo users. The spots have appeared in The Village Voice and TimeOut New York as well as on bus stops and pay phones. Modo should arrive in L.A. and San Francisco in October, with more expansions pending demand.
That demand may already be building. Says Michael Sanabria, a stylist at The Apartment, "They are selling better than I thought they would. Everyone is talking about its great design." If the cachet can hold, Modo just might become a common denominator of cool -- and a megabucks business, to boot.
Copyright 2000, by The McGraw-Hill Companies Inc. All rights reserved.
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