The encyclopedia · Product & Design · Product decision · 2005–2006
Gizmondo — the £229 handheld that lost $300M in a year
Tiger Telematics spent £1m on a launch party and $300M+ overall on Gizmondo, a handheld that sold fewer than 25,000 units worldwide.
Tiger Telematics · 2006-02
What happened
Gizmondo launched in the UK on 19 March 2005 at £229 ($399 in the US): a handheld game console with GPS, camera and GPRS, pitched by Tiger Telematics as a rival to the Nintendo DS and PSP — backed by a £1m launch party with a live tiger, Hollywood guests and a limousine arrival.
The machine's economics were always odd: it was sold below cost on the theory that advertising revenue would make up the difference, and the console was announced again in September 2005 as a cheaper, sleeker 'Gizmondo 2' before the first model had sold in volume — the classic Osborne effect that froze sales of the machine that existed.
Tiger Telematics collapsed into bankruptcy administration in February 2006 after losses reported above $300M and worldwide sales of fewer than 25,000 units. The company's co-founder had a prior criminal conviction (the 'Uppsala Mafia' fraud case in Sweden); Gizmondo's US launch was quietly cancelled weeks before the collapse.
Why it happened
- The business model sold hardware below cost on the promise of future ad revenue — a plan that needed millions of owners to work and got tens of thousands.
- Announcing the cheaper Gizmondo 2 in September 2005 froze sales of the £229 original — the Osborne effect applied to a product that had been on sale for six months.
- The founders treated the console as a celebrity vehicle — a £1m party, tiger, Hollywood guests — while the product itself was a second-tier machine facing the DS and PSP.
The lesson
Gizmondo lost $300M+ selling below cost on an ad-revenue dream, then announced the sequel before the first sold. When the product is free, the plan has to be perfect — this wasn't close.
Aftermath
Tiger Telematics entered administration in February 2006 and its assets were broken up; the Swedish co-founders' past convictions surfaced in press coverage of the collapse. The Gizmondo remains a standard example of a console failure, alongside the N-Gage and Virtual Boy, and its few surviving units became collector curiosities.
Sources
- Gizmondo — Wikipedia (19 March 2005 UK launch at £229 / $399; GPS/camera/GPRS features; £1m launch party; Gizmondo 2 announcement September 2005; <25,000 sales; $300M+ losses; February 2006 administration; co-founder's 'Uppsala Mafia' conviction)
- Wired — Gizmondo's Spectacular Crack-up (1 Oct 2006; SEC filings show Tiger lost more than $300 million between January 2004 and July 2005, sustained net losses aggregating over $382.5 million; Gizmondo Europe declared bankruptcy January 2006; launch-party performers Sting, Pharrell, Busta Rhymes, Dannii Minogue and Tom Green; Stefan Eriksson's Uppsala Mafia convictions)
- BBC News — Gizmondo gadget hits the shelves (19 Mar 2005; UK launch date 19 March 2005; priced at £229; GPS, camera, GPRS and Bluetooth; pitched against Nintendo DS and Sony PSP)
- The Register — Court hands Gizmondo Europe to liquidators (7 Feb 2006; the High Court REFUSED the administration bid at the 2 Feb 2006 hearing and ordered liquidation instead; $90m liabilities; Swedish and Manchester studio liquidations followed)
- The Register — Gizmondo preps widescreen console to rival PSP (12 Sep 2005; successor model announced before the US launch — 'brave, some might say foolhardy'; US pricing $400 standard / $239 ad-subsidised)
- GamesIndustry.biz — Former Gizmondo executive's mafia convictions revealed (26 Oct 2005; director Stefan Eriksson's 1993/94 Uppsala Mafia convictions and 10+ year sentence; Aftonbladet broke the story; Freer's $3.5m repayment)
- 3rd Drawer Down — Gizmondo: The $300M Failure (retrospective; fewer than 25,000 units sold worldwide; £1m launch party cost; the Osborne effect from the September 2005 successor announcement; administration filing 23 Jan 2006 rejected and liquidators appointed 2 Feb 2006)
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