Commentary > Game Over
The battle that never was
The fall and near-rise of a potential GameBoy killer.
October 21, 2002: 1:39 PM EDT

NEW YORK (CNN/Money) - The plan was simple: Try to knock Nintendo's GameBoy from its throne.

Others had tried to introduce real competition to the handheld gaming marketplace - Atari introduced the Lynx in 1989, Sega tried with the Game Gear in 1991 and SNK rolled out the Neo-Geo in the late-90s. Each quickly abandoned the market, though, when they were unable to approach the success level of Nintendo's powerhouse.

Red Jade, thought its inventors, would be different.

You can't blame Fredrik Liliegren and Jasper Karrbrink for their optimism or their interest in the market. After all, handheld gaming hardware brought in $652 million in 2001, according to NPDFunworld and the mystery surrounding Red Jade had gaming geeks in a speculative frenzy.

Red Jade (in prototype form)

Corporate investors were interested as well particularly Ericsson (ERICY: Research, Estimates), which sunk roughly $10 million for research and development. The Swedish-based developer of wireless networks had planned to invest up to $500 million but abandoned the project in April 2001 when sales plunged and Ericsson was forced to cut 22,000 employees. Red Jade shut down before it could enter the production phase.

There's no arguing that Red Jade was innovative. The device would have combined handheld gaming with basic PDA functionality and the option for a "mobile connectivity device" (in English, that's something like a cell phone or wireless web device). It would have had a 3D graphics system on par with or better than the PlayStation. And, according to Liliegren, it would have let owners download games through a secure system, rather than buying them at retail - which he said would have cut prices by 33 percent.

Titles, he said, would have averaged somewhere around $20, but publishers and developers would have made the same amount per sale as they do with today's software, which retails for $30.

The security of that system worried publishers, though. After all, worldwide piracy of computer and video games is estimated to have cost the gaming industry $3 billion in 2001.

"We talked to every major publisher who's out there," said Liliegren, Red Jade's CEO. "Every one of them had interest, but they wanted to see a working unit. They were all a little nervous about the electronic distribution service and how we were going to prevent piracy."

Atari's Lynx...

THQ (THQI: Research, Estimates) CEO Brian Ferrell said Red Jade "was a great piece of technology, but it made no sense economically. They were talking about a retail price of $200-300. At that price, you automatically halve or quarter your market." (Liliegren disputes those numbers, saying Red Jade would have retailed for $150.)

game gear  
Sega's Game Gear...

The system also planned to use Bluetooth technology to let gamers share games to a limited extend. Liliegren gives the example of two Red Jade owners with different games on their system. Using Bluetooth, one player could temporarily download a level of the other's game and they could compete as long as they were within a certain distance of each other.

neo geo  
and SNK's Neo Geo all failed to beat the GameBoy.

Ericsson might seem an odd partner for such a game-oriented machine. In fact, Red Jade first approached Sony (SNE: Research, Estimates) and then Sega as potential partners. Both said they were not interested in building anything for the handheld space. Ericsson, though, saw this as a leapfrog that could put it ahead of Nokia (NOK: Research, Estimates). Those plans evaporated when the company's financial troubles hit.

Sony is regularly asked at analyst meetings and press conferences why it has resisted getting into the handheld marketplace. Its answer is always the same: The company has chosen to focus on the console market at this time. However, Sony has never ruled out the possibility of entering the field. Nor, for that matter, has Microsoft (MSFT: Research, Estimates).

"Microsoft had [a handheld device] on the drawing board, but shelved it to put all of their energy behind the Xbox," said P.J. McNealy, research director at GartnerG2. "So, you're more likely to see one from them than you are from Sony."

Read previous Game Over columns.

Whoever comes to the mobile gaming market next has the odds stacked against them. Nintendo's experience and popularity has given the company an incredible advantage. And the company is rumored to be working on a next-generation handheld that would combine the GameBoy Advance with a cell phone and PDA. Nintendo denies the whispers, but has failed to do so convincingly.

"I think it would be a natural extension of their business," said THQ's Ferrell. "Now that tech prices are coming down, rather than a phone turning into a GameBoy, why not turn a GameBoy into a phone? ... It wouldn't surprise me if they go that way."

If the grapevine is correct, that would be a machine that seems to have a lot in common with Red Jade.

"I think the idea is still very valid," said Liliegren, who has returned to his software roots at Digital Illusions, a game developer. "We've proven the idea can be done at a price point that's very attractive. The one thing we had to prove was that online distribution could take off. It's always risky doing something that no one has done before."  Top of page

Morris is Director of Content Development for CNN/Money. Click here to send him an e-mail.

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