Fuel cell company Medis Technologies announced on Thursday that it had received a $50-million order, marking the first commercial purchase of fuel cells intended for consumers.

“This is definitely something new, and a step in the right direction,” said Sara Bradford, a research manager at Frost & Sullivan. “It’s a good push for Medis to get the units out there. But it’s not really on the market yet.”

ASE International, a distributor to drugstores, convenience stores, department stores, and airport and duty-free shops, placed the order for 200,000 per month of Medis’ fuel cells for the first year they’re available—probably next year—and for 400,000 per month for the second production year.

Medis will begin making 10,000 fuel cells a month by the end of this year, on a semi-automated production line in Israel, said spokesperson Michelle Rush. By the end of 2006, the line will be fully automated, and production will ramp up to 1.5 million units a month, she said.

Israel

The company will begin delivering products in the beginning of next year, said CEO Robert K. Lifton.

Instead of replacing a battery, Medis says its power packs act as “a socket in your pocket,” recharging cell phones and other devices. The technology is a disposable fuel cell powered by sodium borohydride, and each pack delivers about 20 hours of talk time.

The company estimates the price will be $8 for distributors, and $19.99 retail.

The purchase announcement came as Medis began delivering demonstration fuel cells to carriers and distributors, and two days after the company announced it had raised $38 million in a sale of senior convertible notes due in 2010.

“This is a stellar moment for us, and a terrific week,” said Mr. Lifton. “For the first time in history, we’re putting on the market a consumer product that allows consumers to know they are always going to have power.”

A Battery of Meetings

The company has set up meetings with eight carriers and distributors from this week to mid-August, and is giving them beta units to show their enterprise customers, said Mr. Lifton. Those companies have already tested earlier prototypes and agreed to accept these.

Depending on the results, the companies could decide to market the fuel cells and place an order, said Mr. Lifton.

“We read their willingness to sign cooperation agreements, and to have these meetings with us, as reflecting a very strong interest in marketing it,” he said. “We don’t think they are wasting their time.”

Mr. Lifton said he expects more meetings and would be disappointed if Medis doesn’t sell out its first production line months before it goes up. Medis will lose money on those first units, he said, but expects a gross profit of $3 per cell once production reaches its 1.5-million-cell capacity.

The first line of fuel cells will be smaller versions of the current prototypes, but Medis will have a public contest to create the final design, for when the line becomes fully automated, said Ms. Rush.

“It doesn’t have to be a little rectangular, black box,” said Mr. Lifton. “Our objective is to not only have a functional product that serves a purpose, but also to have a cool product that people want to be seen with. We want to get the public involved in the design.”