If you were ever a fan of the Transformers, check out the latest phone concept from Israeli outfit Modu.

The Modu phone is a tiny mobile that can be transformed into a range of other devices by simply adding a "jacket" that can be bought separarately.

The Israeli manufacturer is predicting a $1 billion revenue for 2011 for the phone and casings, which will allow mobile users to change their phone from anything from a music player to a gaming device.

According to Reuters, Universal Music is looking at developing music-geared jackets for the phone, which Modu will display at the Mobile World Congress wireless show in Barcelona next week.

Modu already has the backing of flash memory manufacturer SanDisk.

Modu founder Dov Moran, who is widely recognised as the inventor of the USB flash drive, founded msystems in 1989 and sold the flash memory company to SanDisk in 2006.

Reuters reports that Sandisk has invested $5 million in Moran's venture out of a total of $20 million but Moran hopes to secure another $100 million in funding this year with a $30 million round in a few months from existing investors and new venture funds.

"We do have a lot of interest", he said.

Moran is, however, also thinking laterally with deals expected with top fashion houses for designer casings, after the phone morphing system goes on sale with three service providers in Russia, Italy and Israel in October.

Telecom Italia, BeeLine, owned by Russia's Vimpelcom and Israel's Cellcom Israel have all signed up, according to Modu.

By January next year the phone will also slot into consumer electronics devices the company is calling "modu mates" such as digital photograph frames, cameras, clocks or navigation systems to give such devices wireless connectivity.

For example, a GPS could display maps for addresses that a user has saved on Modu. A home cordless phone could display numbers and other address book information when a Modu is plugged into its base, or a car's speaker system could be used to amplify phone calls while someone is driving.

Modu is already said to be working with Magellan Navigation and stereo-maker Blaupunkt, which is part of Bosch.

Moran says that he is confident of success despite fierce competition in this market. "It's not like the top five companies where everybody makes devices similar to the others", he said. "We're going to change the cellular market."

The phone, which can make calls without a "jacket", is being manufactured by Foxconn, will include chips from Texas Instruments and is expected to cost 200 euros, although prices will be set by carriers.

It is a GSM quad-band phone that weighs 1.5 ounces and is 0.3 inches thick without a jacket.

The first-generation Modu will have 1GB of flash memory.

A jacket will cost 20-60 euros each.

Computer World explains that each jacket contains its own configuration file that enables it to display strikingly different graphic and colour schemes on its own screen while connected to the underlying Modu.

Eventually Modu expects its jackets to go on sale everywhere from bookstores to airport shops, where travelers could pick up a jacket designed with in-built features such as restaurant guides for their destinations.

A 3G model should be available in the first half of 2009.

>> Link - Modu
>> Via - Reuters
>> And - Computer World