Next-Gen Cellphones To Have Israeli Ring


Take a good, hard look at the cellphone in your pocket. Whether you’re an avid text messager or you’ve only recently learned how to change your ring tone to something snazzy, be forewarned. Within the next year or two, your cellphone will undergo such a radical transformation that you’ll view the phone you’re currently carrying around as terribly passé. And impersonal, too.

At least that’s what dozens of Israeli startups — and their funders —are betting on.

Israeli startups with fun-loving names like iSkoot, BlogTV and Vringo plan to leverage the draw of social networking on-the-go to change the way you use your cellphone — by introducing and marketing software applications that incorporate Web 2.0 sites like Facebook and make the cellphone experience much more personalized. Their software applications are currently available for free online — but only for select cellphones with third-generation (3G) technology first appearing on the market here.

The days when a phone was used primarily to make calls are over. The cellphone of the not-so-distant future is going the way of the iPhone 3G, which debuts July 11. It’ll serve as a mini-computer, allowing you to surf the Web, download e-mail, watch YouTube videos — simultaneously, and with the high-speed access you expect from your PC. But that’s just the beginning.

Soon you’ll be able to host live, interactive broadcasts from your cell phone and join the 150,000 registered BlogTV users worldwide who upload more than 700 videos each day. You’ll also be able to exchange video ring tones when you phone your buddies, by downloading a free program available at Even Internet dating is gradually migrating to mobile. And, if a professor at Hebrew University has his way, the cellphone may one day help diagnose breast cancer by transmitting medical images for diagnosis.

“In the past 12 months, we’ve seen an increase in the number of new and young mobile technology companies getting funding from the private sector and venture capitalists,” says Eyal Reshef, founder and CEO of the Israel Mobile & Communication Association (IMA), a nonprofit network of more than 100 Israeli telecommunication companies. Reshef estimates that between 30 and 40 mobile startups joined the IMA this year alone.

Mobile companies are getting an increasingly larger share of the venture capital pie, with more than 15 percent of the $1.76 billion invested in 2007 in Israeli startups, or $264 million, directly funding Israeli mobile technology companies, according to the IMA. Google CEO Eric Schmidt was recently quoted in a German paper saying that the mobile business is poised to become much bigger then the Web business.

Part of this growth has to do with our growing reliance on cellphones. Among adults aged 18 to 29, 57 percent view the cell phone as a necessity, according to the Pew Research Center. And nearly one in six American homes has replaced its landline with a cell phone, according to the National Center for Health Statistics.

“Mobile has become an extension of the body,” says Nurit Gazit, vice president of operations at BlogTV. “It allows you to enhance your personality, to express yourself. In Israel, that’s already been happening for a few years.”

As cellphone technology improves and its capabilities expand, more and more people are ditching their computers in favor of cellphones. “There are 3 billion mobile users and only 1 billion PC users,” says Jacob Guedalia, president of iSkoot, an Israeli startup that brings Internet services like Skype to mobile handsets. “As the phones become more like PCs, the opportunities will grow exponentially.”

The fact that Israeli companies are leading this new wave is no surprise to industry veterans. “Israel is a natural hub for mobile technology and innovation,” says Jon Medved, a serial entrepreneur, former partner of the VC firm Israel Seed Partners, and the founder of Vringo, which raised $12 million from New York-based private equity firm Warburg Pincus last year. “The first cellphone was essentially built in Israel,” he says. There’s also the military advantage. “Wireless communication was always an important military tool,” he says. “Israelis are very good at wireless.”

Israelis have also long ago figured out ways to use mobile technology to improve their daily lives. A popular cellphone service in Israel allows drivers to receive text message notifications when they are about to enter police-monitored speed traps.

Israeli mobile companies that are new to the scene allow you to text using pictures by downloading more than 230 colorful, fun icons from Zlango. A company called Clip in Touch lets users create free customized greeting cards and invitations on their cell phones by adding pictures, recording personal messages and inserting text. And TJAT (which phonetically sounds like “chat”), integrating popular instant messaging communities, allows users to chat with all of their friends, whether they’re on AIM, Yahoo!, or Google Talk.

As any Israeli (or European for that matter) will tell you, Americans are woefully behind when it comes to mobile technology. “To gain national coverage took some time and there’s not enough competition in the States,” says Reshef. High cost is also a factor. Data plans, which are needed to access the Internet from a mobile phone, are more expensive in America than in Europe. And unlike in Israel, incoming calls cost both parties.

So what’s changed in the past few years? Apple’s iPhone. “It was a phenomenal success,” says Reshef. “It helped a lot of Americans discover the mobile Internet.” Putting its criticisms aside, the iPhone managed to mobilize the Web for the average cell phone user. And mobile insiders believe that smart phones — cellphones with PC-like functionality such as RIM’s BlackBerry and Apple’s iPhone — will gradually overtake the consumer cellphone market.

Israeli startups will be watching sales of the new iPhone closely, since most of their applications run on phones equipped with 3G (third generation) technology, featuring increased bandwidth capable of accommodating Web-based applications, video and high-speed Internet. In Israel, 3G is already the norm. “For about a year, most phones sold here are 3G,” says Reshef. “And all the operators are measured on their consumer migration to 3G.”

But America’s backwardness when it comes to cellphone technology may just be Israel’s gain. That’s because America represents a country with hundreds of thousands of potential customers, who will likely become more addicted to their mobile phones as technology improves. “They’re obsessed with this iPhone,” says Reshef. “Luckily Americans have finally discovered mobile technology.”


How It Will Enhance Your Cellphone

The cellphone is no longer just for making calls. Take a look at these innovative Israeli companies that are developing cool mobile applications that will change the way you use your cellphone.

Brings Skype to your mobile headset

IM friends on AOL, GTalk, Yahoo!, using your cell

Exchange video ringtones when you call your buddies

Message your friends using a vocabulary of 230+ fun

Broadcast your own live, interactive videos on your cellphone