Gizmondo enters the game fray
Florida company to take on Sony, Nintendo
By Steve Goldstein, MarketWatch
Last Update: 12:01 AM ET March 19, 2005 [ Page 1 | 2 ]
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LONDON (MarketWatch) -- Portable game devices are more than thumb toys these days, as a small Florida company is about to prove.
The Gizmondo, made by the European division of over-the-counter listed Tiger Telematics (TGTL: news, chart, profile) , goes on sale in the United Kingdom Saturday as the most tricked-out handheld device yet created.
Priced at 229 pounds ($440), the Gizmondo plays games, music and videos; takes digital pictures; and sends and receives text messages to and from mobile phones. It includes Bluetooth for multiplayer games and can be a tracking device via its GPS satellite navigation.
"It is a mobile multimedia device. Gaming is the strong aspect, but music is a strong, unique feature; GPS is a strong, unique feature," said Sven Thiele, Tiger Telematics' chief operating officer.
Yet for all that sophistication, Tiger Telematics still faces formidable competition, with only a fraction of the financial and marketing resources, in confronting the latest advanced offerings from Nintendo (JP:7974: news, chart, profile) , Nokia (NOK: news, chart, profile) and Sony (SNE: news, chart, profile) , which is soon releasing its PlayStation Portable in the United States with a lineup of some of the world's most popular titles. See full story.
"The PSP is going to come out of the gate in a very strong position, and you put that against what Gizmondo is going to put out, it seems Gizmondo will have a hard time gaining an edge in gaming software," said Vince Broady, founder of GameSpot, a leading video-game Web site.
A breed of its own
The Gizmondo will use satellite tracking in games due later this year, so that a fighting game can be staged on the actual street where it's being played. Jacksonville, Fla.-based Tiger Telematics is planning to use its satellite system to direct targeted ads to consoles, and is also offering a music download service. Visit the Gizmondo site.
The device doesn't have a hard drive, though, so it relies on plug-in SD cards of the kind that are standard in digital cameras; with those storage capabilities, it will be able to carry roughly as much music as Apple Computer's (AAPL: news, chart, profile) iPod flash-memory models.
Though made by a relatively technology name, Gizmondos will run off Microsoft Corp.'s (MSFT: news, chart, profile) CE.net operating system, powered by a processor from South Korean technology giant Samsung and a graphics chip from Nvidia (NVDA: news, chart, profile) . In the United Kingdom, it will use Vodafone Group's (VOD: news, chart, profile) mobile network.
The Gizmondo is set to roll out to continental Europe and the United States later in the spring. It's planning its U.S. rollout around the E3 Expo in Los Angeles, scheduled for late May.
A potential godsend for Gizmondo came in the form of a recent announcement from Sony that said it is delaying the PSP's previous March 24 European launch to focus on the U.S. market.
"That's a fortunate turn of events for them," said GameSpot's Broady.
Tiger Telematics is planning to spend $50 million marketing the launch in the United States and has earmarked 23 million euros ($30.6 million) for the United Kingdom and Europe, a spokeswoman for the company said.
It's also opened a store on London's famed Regent Street -- Apple only recently opened a store on the same strip -- and already has aired commercials on U.K. television, highlighting its "do-everything" capabilities.
Operating officer Thiele said he wouldn't comment on sales goals, but indicated that interest from distributors and retailers are ahead of expectations, particularly in Australia, Italy and Turkey.
He acknowledged the competition, but said Tiger Telematics' small size has forced it to be resourceful. "We didn't have hundreds and hundreds of millions of dollars to spend on R&D the way Sony has."
Nevertheless, he argued the company didn't need to win the gaming battle to gain traction. "The gaming market is worth $25 billion annually; we don't need a large portion of that for us to be successful."
Gizmondo's lack of a legacy will help the company as various technologies converge, according to Thiele.
The device doesn't have a hard drive, though, so it relies on plug-in SD cards of the kind that are standard in digital cameras; with those storage capabilities, it will be able to carry roughly as much music as Apple Computer's (AAPL: news, chart, profile) iPod flash-memory models.
Though made by a relatively technology name, Gizmondos will run off Microsoft Corp.'s (MSFT: news, chart, profile) CE.net operating system, powered by a processor from South Korean technology giant Samsung and a graphics chip from Nvidia (NVDA: news, chart, profile) . In the United Kingdom, it will use Vodafone Group's (VOD: news, chart, profile) mobile network.
The Gizmondo is set to roll out to continental Europe and the United States later in the spring. It's planning its U.S. rollout around the E3 Expo in Los Angeles, scheduled for late May.
A potential godsend for Gizmondo came in the form of a recent announcement from Sony that said it is delaying the PSP's previous March 24 European launch to focus on the U.S. market.
"That's a fortunate turn of events for them," said GameSpot's Broady.
Tiger Telematics is planning to spend $50 million marketing the launch in the United States and has earmarked 23 million euros ($30.6 million) for the United Kingdom and Europe, a spokeswoman for the company said.
It's also opened a store on London's famed Regent Street -- Apple only recently opened a store on the same strip -- and already has aired commercials on U.K. television, highlighting its "do-everything" capabilities.
Operating officer Thiele said he wouldn't comment on sales goals, but indicated that interest from distributors and retailers are ahead of expectations, particularly in Australia, Italy and Turkey.
He acknowledged the competition, but said Tiger Telematics' small size has forced it to be resourceful. "We didn't have hundreds and hundreds of millions of dollars to spend on R&D the way Sony has."
Nevertheless, he argued the company didn't need to win the gaming battle to gain traction. "The gaming market is worth $25 billion annually; we don't need a large portion of that for us to be successful."
Gizmondo's lack of a legacy will help the company as various technologies converge, according to Thiele.
Indeed, a London-based spokesman for Nintendo noted Gizmondo's multifunction approach even while touting his own product. "It's more of a gadget," he said. "The DS is dedicated to gamers; it doesn't do 50 different things."
For his part, Broady said "I don't think people will buy a PSP, a [Nintendo] DS and a Gizmondo."
Mixed reviews
As the Gizmondo has yet to hit the market, there weren't many reviews available. The Times of London called it a "deeply uncharismatic lump of black plastic [that] leaves you cold." The newspaper complained the screen was too small and that there were no big-name games.
The Guardian newspaper was more positive, praising its screen, joystick and graphics, but also complaining about the lack of titles.
Thiele said the gaming catalog will grow, expecting 40 to 60 games over the next 12 months.
Sci Entertainment Group (UK:SEG: news, chart, profile) has produced a few games for it -- such as "Richard Burns Rally" and "Conflict: Desert Storm II" -- for a guarantee of 750,000 pounds plus 50 percent of net receipts.
Microsoft (MSFT: news, chart, profile) has agreed to port some titles, including "Age of Empires" to the Gizmondo. The popular "Halo" is not on that list -- for now.
"The fair and honest thing to say is we've noted the degree of interest in Halo," Thiele said with a laugh.
Buena Vista Games, a unit of Walt Disney (DIS: news, chart, profile) , has agreed to port "Tron 2.0" plus four other titles for the Gizmondo; Disney is getting $100,000 plus royalties in return.
Shares for games
According to SEC filings, Tiger Telematics in February sold $19.5 million in shares to buy game content and increase marketing expenses.
In the first quarter alone, it sold shares valued at $14.8 million to service providers and employees, a practice it said it may continue in the future.
But Thiele said that while partners are being "suitably rewarded," the shares they've awarded compose a small part of issued capital. The company is backed by various private investors and a few funds, he added.
Tiger Telematics was founded in 2001 to make global positioning products and in 2002 decided to make handheld entertainment products.
Its stock market history has been a bit rocky, as shares were removed from the OTC Bulletin Board in May 2003 for not meeting periodic reporting requirements.
In addition, Grand Prix competitor Jordan Racing sued the company for $3 million over a disputed sponsorship arrangement; the company hasn't taken provisions for the lawsuit. Thiele said he had no update on the case.
The most recent financials show that nine-month losses ending Sept. 30 last year narrowed to $2.4 million from $9.8 million.
Thiele indicated that the business will soon be filing more updated financials with regulators.
MarketWatch's Scott Banerjee contributed to this report.
