2006 Predictions 5 and 6

How are we doing so far? Don't forget to leave a comment.

5. Ringtones implosion accelerates, as one of the shortest boom and bust cycles becomes clear to all.

6. Gizmondo withdraws from handheld gaming sector.

Gizmondo must be one of the big failures of 2005 and I'm really, really (no, really!) puzzled as to what the hell's going on there and why they seem to have access to so much money.

Firstly, they want to take on incredibly strong incumbents in the handheld sector, Nintendo's GameBoy and Sony's PSP. Not to mention N-Gage, that was patently struggling, despite the might and distribution strength of Nokia behind them. Why on earth would any company want to try this with limited resources?

Well, if the product was competitively priced, had a bunch of extra features and crucially, a range of great must-have, exclusive games, they may just stand a chance. But no, the games portfolio was shite and limited and it was more expensive than the entrenched incumbents.

And their distribution strategy in the US was laughably to hang out in a few malls.

Were their senior execs contrite and modest in their demands while overseeing this fiasco? Did they hold back their salaries for when they could demonstrate that this unpromising approach had worked? Not a bit of it! Salaries included several million dollars of cash and options and luxury $250,000 dollar cars.

Then we have loads of corporate shenanigans including buying companies owned by directors and paying off privately incurred legal bills. Admittedly, some of these actions were corrected, but why were they allowed to happen in the first place?

And did we mention "legal, accounting and consulting costs" in the first six months of 2005 of $75 million? And a net loss of $220 million in that period?

Pretty bad stuff - what next? Maybe some of the directors were a bunch of convicted white collar crooks that investors has entrusted their money to? Err, yes actually. On this discovery, they resigned.

Someone do the decent thing and put them out of their misery. No one can really believe that this mess can be saved. Can they?

So, Prediction 6 - Gizmondo must die.

Comments

[Brian]

Based on Tiger Telematics' sudden lack of over-hyping press releases after the Swedish Mafia revelations, as well as their nose-diving stock price (think there might be a correlation?), prediction #6 might be the first one to come true in 2006.

[Jonathan]

What is the source of the data and conclusion that ringtone market is imploding?

[William Volk]

The thing that may go away with Ringtones are the phony 'FREE' deals that are really subscriptions. The misuse of 'FREE' is abusive, and the 'hidden' nature of the subscriptions is an abuse of the customers.

Ringtones on their own WON'T go away, but the deception will. One driver will be the move to digital-audio 'mastertones.'

Finally it is worth noting that when customers upgrade phones, the ringtone purchasing cycle begins anew ... hence the growth in Mastertones.