Neonode in bankruptcy mode: The end of the N2 touchscreen phone

The Swedish subsidiary of Neonode Inc. – Neonode AB – filed for bankruptcy this week and the parent company said it too would restructure and continue life as a touchscreen-licensing operation.
“For the past six months, we have focused on turning the business around and solving the financial situation of Neonode AB,” said Per Bystedt, CEO and chairman of Neonode Inc., in a prepared statement. “We continue to have great belief in our technology and believe we have a competitive product in the Neonode N2. But without sufficient funds we cannot continue operations.”
Neonode, which gained a Nasdaq listing last year (NEON), quickly faced investors’ wrath. Its stock plummeted more than 20% to a 52-week low of little more than 3 cents per share. (The 52-week high was $4.20.)
Neonode may well be the first of many ambitious handset vendors to fall as a global credit crunch denies capital to companies with an abundance of ideas and too little cash to realize them.
Neonode was an early touchscreen innovator and creator of the N2 device, a compact touchscreen unit that long preceded Apple Inc.’s iPhone.
The company was formed in 2001 and the N2 – a quad-band, GSM/GPRS device – hit the market last year, prior to the iPhone’s launch. It sold in Europe, unsubsidized, for more than $500.
But great ideas and market realities often collide. As touchscreen technology suddenly became the “next big thing,” Neonode failed to garner the sales, partnerships and investors – and, thus, the scale – necessary to compete in a global industry. Its efforts were quickly over-run by well-funded, experienced competitors with brand power and global reach.
The fledgling company’s recall of the N2 this past summer could not have helped.
Last spring, then-CEO and president Mikael Hagman – former CEO of Sony Corp. in Sweden and Finland – was asked by a reporter how the company could sustain itself after six years without significant sales.
“Neonode recognizes that pursuing the consumer electronics and mobile device market requires funds,” Hagman responded by e-mail. “Current investors are committed to seeing Neonode succeed and the company is well-equipped to raise more funds.”
A month later, Hagman had resigned and investor Bystedt, who said he had invested nearly $3 million of his own money in Neonode, had taken the helm.
The Neonode N2 joins a long and growing list of failed phones, including the Palm Inc. Foleo, the Gizmondo and the Wildseed-based Kurv.
Article modified Dec. 10 to clarify N2 technical specifications.