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  • Fusion Garage Announces Strategic Partnership With CSL Group of Malaysia, joojoo to Ship by End Feb

    Feb
    04
    posted by Mohan Belani on Thursday, February 4, 2010 at 6:09am Categories: Blog

    joo_joo_crunchpadFusion Garage just announced a manufacturing agreement and strategic partnership with mobile device OEM and distribution giant CSL Group of Malaysia. This effectively means that the joojoo tablet will move into full production and initial shipments of the product are expected to reach consumers by the end of February. Skeptics who have been raving the end of Fusion Garage, especially with the impending law suit and the recent launch of the iPad, will be surprised to heard that Fusion Garage is well on schedule to deliver the tablets to its customers and will also be announcing a 3rd round of investment soon.

    Details on the Manufacturing Agreement and Strategic Investment With CSL
     CSL is one of the largest manufacturers of cell phones, mobile devices, netbook and notebook computers in Southeast Asia, with sales of nearly USD$300M. As mentioned by Chandra during my recent meet up with him, hardware startups face a much higher cost issue as opposed to software startups. Funding for software startups mostly goes to operational areas, but for hardware startups, a significant amount of funding is needed in upfront manufacturing costs. Due to this issue, a lot more time is needed for the startup to be cash flow positive. In this partnership with CSL, this major issue is greatly alleviated since CSL is directly investing in Fusion Garage (they are part of the upcoming investment round). They will also eliminate all upfront costs required for the manufacturing of the devices. From a financial perspective, this will give Fusion Garage a huge upper hand and will allow them to manufacture the devices for high volume consumption. In return, CSL will take a percentage of the amount of revenue received per item sold. Through this unique arrangement, Fusion Garage foresees that they will be able to break even and reach profitability by end of 2010.

    What Does CSL See in Fusion Garage?
     One of the main factors why CSL is partaking in this deal is because they believe that Fusion Garage will ship the JooJoo tablets in high volume. They strongly believe in the Internet tablet market, and it is a space they wish to be part of and have identified Fusion Garage as the right partner to work with. As mentioned by Dato Eric Chuah, Chairman of CSL Group of Companies, they are bullish – not just on the  promise of the joojoo and the Internet tablet market’s potential but also on Fusion Garage’s forward looking vision. Through Fusion Garage, CSL has opened up an entirely new market opportunity for themselves.

    Where Are the Main Markets for Fusion Garage?
    Chandra clearly mentioned that the main market for joojoo is still the US. They have started their launch there through their online sale and as of now, they have already started discussions with large online retailers in US. Asia is clearly one of the key markets for them. This is where the CSL deal comes into play again. While distribution of the product is not part of the current partnership terms, there could be a possibly that CSL may help with distribution in the longer term. Interestingly, when I asked Chandra if they have considered working with SingTel, he replied with a wide grin. I think we can expect something interesting coming out of there as well.

    What Does Chandra Think of the iPad?
    The conversation with Chandra naturally steered towards the iPad. Chandra mentioned that the category of such a product was created by Fusion Garage in the first place. Furthermore, it could be sheer coincidence, but it is interesting to note the similarity in cost between the joojoo and the iPad. In fact, Chandra argues that the launch of the iPad has fueled a greater interest in the joojoo tablet and since the iPad launch, there has been a 30% – 35% jump in the enquiries for joojoo. From a functionality perspective, Chandra is pretty confident that the joojoo outshines the iPad, especially since it has a much larger touchscreen (300 pixels more than the iPad), in built camera, flash support etc. The main difference would clearly be the approach both devices have taken to the user experience; the iPad focuses on a App Store based approach whereas the joojoo focuses on a stripped down web based experience.

    Open Platform vs Closed Platfrom – How Does joojoo Aim to be Different?
     The main talk with devices these days is the developer and applications ecosystem surrounding the device. Apple’s App Store is a clear benchmark for this with the success they have achieved with the App Store. They have also attributed their excellent user experience to their closed platform approach, something Chandra begs to differ. Chandra believes that you can still have an excellent user experience with an open system. One of his main gripes with the Apple App store is the lack of a discovery mechanism for the apps. This is something Fusion Garage is very focused on building. Unlike the iPad, they want to allow existing web applications to build upon joojoo, without having to redo an entirely new application. For example, Facebook, an existing web application, can plug into joojoo’s APIs and automatically interface with their touchscreen etc. without having to build a separate, joojoo-only app for the device. The launch for this platform has been ambitiously set to coincide with the shipping of the tablet. We are definitely hoping to see a ready version of the platform soon and we are definitely excited for the upcoming details.

    strategic partnership with OEM, based out of SEA, market share in malaysia is just behind of Nokia (in double digits). Mobile phone OEM, but has netbooks and notebooks in their brand portfolio. Intresting becuase for software companies, you only need operation funding. but hardware, u need manufacturing costs, a lot more complicated. need up front money, amount of time needed for cash flow +ve is much highher. what they have done is that strategic partner is an investor (part of investment round), and will also eliminate all upfront costs and take a percentage of the amount of revenue per item sold. Planned to break even and reach profitabolity by end 2010. they believe the company will ship in high volume.
    why is the company working with them? great potential for market, intrigued by business. they will help them shift in high volumes. no bundling of services together. purely a strategic investment partnership. this is huge, gives them a huge financial upbeat. they may help with distribution, a possibility, but not part of the deal now.


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