WorldGate, Motorola hang up videophone partnership

Fri, 03/31/2006 - 7:00pm

WorldGate Communications and Motorola Inc. have scuttled a distribution agreement centered on the "Ojo" broadband videophone.

Going forward, WorldGate will head up all sales, marketing and distribution of Ojo and any other video telephony products developed by WorldGate. The companies announced the original, exclusive agreement in May 2004.

WorldGate and Motorola officials declined to provide any specific reasons for the "amicable" breakup, but one point of concern with the product has always been its high retail price.

"Is pricing an issue? Sure it's an issue. We've always worked on getting pricing down," WorldGate Chairman & CEO Hal Krisbergh said during a call with reporters and analysts.

WorldGate has already taken a step forward with that strategy, introducing a lower-cost, less feature-laden broadband videophone to complement the flagship model. The new, black model, dubbed Ojo Shadow, will sell for $249 (following a $150 rebate). With the same rebate applied, the original Ojo model will retail for $349.

One feature the Shadow will not include is an integrated 2.4 GHz cordless phone that is available with the original Ojo.

Moving forward, WorldGate intends to maintain the Ojo brand even with Motorola out of the picture. Motorola, however, did provide Ojo with lots of exposure it probably won't enjoy on its own. At the 2005 Consumer Electronics Show, for instance, Motorola dedicated a significant portion of its booth to Ojo, complete with product demos and gawk-worthy 6-foot models of the device. At the same show this year, Motorola was promoting Ojo with much less fanfare. Thanks to a product placement deal, the Ojo has also been seen on 24, Fox's hit drama/thriller.

Krisbergh said WorldGate hopes to expand the retail availability beyond the 300 stores Ojo is available in now.

To help in that area, the company has recently hired Richard Casey Jr., late of Casio and Texas Instruments, to the post of vice president of sales. WorldGate has also signed on Mototech Inc. of Taiwan to distribute the Ojo in the Asia Pacific region. In addition to an initial order for 1,000 units, forecasts are for Mototech to sell 8,000 over the next two years.

Despite the earlier connection with Motorola, the Ojo videophone has yet to win valued distribution partnerships with broadband service providers. Krisbergh said WorldGate will now apply a "major focus" on scoring partnerships with cable operators, telcos, VoIP companies and other "special interest" service providers.

Before shifting to the videophone, WorldGate developed and distributed interactive television products, including a platform that allows consumers to surf the Web on their televisions. The company sold its iTV assets in Oct. 2003 to TVGateway LLC.

For its part, Motorola will remain "actively involved" with videophone technology, and move ahead on its video work involving cellular phones and wireless 3G networking, a company spokesman said.

"We still think that the video telephony market is something that is important to our vision of seamless mobility," the Motorola spokesman said.


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