Tiger Telematics (TGTL.PK) launched its Gizmondo mobile/game console/GPS/camera/toaster on Monday in the US. As I mentioned in an earlier post about the aptly named Phantom console, it's extremely difficult to successfully launch a console - in fact there are about 4 examples of it in the past 15 years, from Nintendo, Sega, Sony and Microsoft, while the ground is littered with failures- the key common denominator is that there are no start ups in that group. At Sega we launched the new Dreamcast with a $100M ad campaign, a powerful box which lost money on every sale, and a very well recognized brand name, and still got our doors blown off by the other 3 players, primarily due to the enormous costs involved.
You noticed that I haven't reviewed the device because it doesn't matter what the device does, or what it costs (although it's too expensive). Content-driven consoles don't sell themselves - that's why the Big 3 spend hundreds of millions of dollars on marketing, have massive distribution organizations, and still lose tons of money in the early days. Gizmondo announced they would have distribution across all 50 states this week, but the corporate site today shows it being sold at retail in only 10 states, with the entire state of CA having only 4 retail locations, none of which are in the Bay Area - clearly not a nationwide roll out, primarily because it's incredibly expensive to do. The games seem fine (although I haven't played them), but there don't seem to be any breakout titles, and even the addition of a couple of EA games won't solve that issue, as Nokia found out with N-Gage. Given the competition from the Sony PSP, Nintendo DS, and ever increasing power of standard cell phones, Gizmondo is going the way of Tapwave.
Based on all historical data, there is little chance that Gizmondo is going to succeed - the stock price is finally dropping towards reality, with a 75% drop in the past year, but the company is still worth a laughable $350M+ - To add to the fun, two Gizmondo executives, including its Chairman, resigned last week to pursue "other entrepreneurial ventures". Finally, the company lost an incredible $163M in Q1 2005, leaving it with less than $1M in the bank and $63M in short term payables. Short it if you can borrow it and remember not to invest in start-up console companies.
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