Gizmondo Tries UK Price Cut As SEC Filing Shows Massive Losses

Author: by David Jenkins, Simon Carless

Representatives from Gizmondo Europe have announced that, less than a month after its official launch, the Gizmondo portable console is to be lowered in price from £229 ($432) to £129 ($243). However, the drop in price will only be for new Smart Adds-enabled versions of the console, which will retail alongside the standard model. The Smart Adds scheme will deliver TV-style promotions to the device via the Gizmondo’s GPRS connectivity. The advertisements are targeted according to the user’s indicated areas of interest, their gender, age and location. Peter Lilley, Head of Smart Adds, says: "Imagine the emotional power of TV combined with the accountability of direct marketing, the accuracy of direct mail and the mobile interactivity of SMS; that's what a Smart Add is. A Smart Adds-enabled Gizmondo is effectively being subsidized by the marketing budgets of major youth and product brands in return for showing the consumer their latest ads." The new Smart Adds-enabled Gizmondo will be released on April 22nd in the UK and will be available at launch in other territories - although no firm date has been set for any launch outside the UK. Final focus testing is being conducted until the end of April, with the full roll-out of Smart Adds planned for May 2nd 2005. Although the Smart Adds concept is an interesting one, and parallels the sort of in-game advertising being introduced by Massive Incorporated, the Gizmondo itself still has a number of unanswered questions regarding it. Its launch was relatively limited within the UK, and there are still only two games available for it – Fathammer Classics and Trailblazer. There have also been a number of customer complaints about an unreliable operating system and GPS software. In addition to this, a recent SEC filing from Gizmondo over the lateness of its accounts indicates gigantic losses for the company in the period leading up to the handheld's launch, commenting: "For the year ended 2004, losses are expected to be approximately $100 million on revenues of $748,000." Gizmondo's habit of issuing large amounts of shares in lieu of monetary payment for many of its acquisitions, as well as multiple outstanding or settled lawsuits from sources as diverse as the Jordan Formula 1 team (over disputed advertising) and former investment advisors for the company (regarding disputed share issues) have also disturbed some analysts. The company currently has 46.3 million outstanding shares, giving it a market cap of $891 million.