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Motorola Hangs Up on Ojo Distribution Agreement

After a 10-month sales effort, Motorola Inc. blinked last week, saying it would cancel a distribution agreement to co-market the Ojo video phone developed by WorldGate Communications Inc.

Going forward, Trevose, Pa.-based WorldGate will take over marketing, sales and distribution for the Ojo, which is Spanish for “eye.” The video phone debuted last spring and is available in 300 retail outlets for $599; a recent rebate cut the price to $474. Customers also pay WorldGate $14.95 per month for content and services. The company hasn’t released any sales figures for the Ojo, which gained some exposure through use in the Fox series 24 last year.

In a conference call last week, WorldGate CEO Hal Krisbergh — a longtime cable executive who once ran set-top box maker General Instrument Corp. before it was acquired by Motorola — told nervous investors the loss of the familiar Motorola brand would not damage Ojo’s marketability.

WorldGate named Richard Casey vice president of sales to lead the effort to boost Ojo’s sales prospects. The aim is to expand beyond the existing 300 retailers and sign distribution deals with U.S. cable and telco TV providers.

“I expect in the next several weeks to be making announcements related to that increased distribution,” Krisbergh said. “It’s not just plans that we are going to announce — it’s deals.”

WorldGate plans to introduce a lower-cost Ojo that eliminates some features, including the cordless handset. It also will work on paring down the cost of the full-feature Ojo phone, “and keep ourselves competitive,” Krisbergh said.

Krisbergh conceded that, rebates aside, the hefty $599 price for the full-featured Ojo is a consumer barrier. “Is pricing an issue? Sure, it’s an issue,” he said. “Was it specifically the issue related to certain opportunities? I’d really rather not talk about that. But I’ll just simply say that pricing has always been an issue, and we’ve always been working hard to get pricing down.”

WorldGate started in 1995 as an interactive-TV software company. In 2000, Krisbergh opted to switch gears and sold off the ITV business in October 2003 to TVGateway LLC.

Phones already stamped with the Motorola brand will continue to be sold, and “we have an orderly program to handle that,” Krisbergh said.