Has the Zodiac Cracked the Code?

I have been taking every chance that I can to get some hands-on time with the Tapwave Zodiac and I have to say that it is a very impressive handheld gaming device. If the Zodiac proves to be a very successful device, it will fly in the face of what has proven to be the "secret sauce" for this industry -- good software titles and a low-cost hardware unit. The purpose of this article is not to discuss the Zodiac vs. the N-Gage (that is the subject of a forthcoming piece). In my opinion, there are two things that really drive the sales of the world-beating device in this space, the Game Boy Advance:

Superior Software Titles - One thing that makes the Game Boy Advance such a great platform (full disclosure: I have owned every flavor of Game Boy (Original, Color, Advance, Advance SP) ever made) is that there is such a wide variety of titles. The GBA has always sported great "classic" titles such as Metroid, Mario Kart, Zelda, etc and some new winners like Golden Sun. Someone in the market can take it on faith that Nintendo and its 3rd party developers will crank out some big hit titles for the platform.

Low-Cost Handheld Platform - The other thing, and I would argue the more important thing, that drives the dominance of the GBA is its low cost. At the end of the day, I would argue that there are two major crops of people who buy Game Boy Advance units:

1. Parents who want to keep their children occupied during car rides, at grandma's house, or on long plane rides.

2. Young adults, mostly males, who grew up playing 8 and 16 bit systems growing up and are willing to shell out less than $100 for a good portable game system.

Both of the aforementioned groups are fairly price sensitive. Parents are only willing to pay so much for one entertainment purchase and young adult gamers are only willing to pay so much for a portable gaming experience. While the Zodiac and the GBA will offer roughly equivalent prices, the Zodiac handheld is roughly 4-5x as expensive as a GBA. At a roughly $300 entry price, the Zodiac strikes me more as a replacement/substitute for an Xbox or PS2 than it does as a complementary system for the on-the-go gamer. If we make the assumption that Zodiac and its partners will develop enough compelling titles to make the software differential moot, a successful market entry by the Zodiac would really be a big deal. It would really challenge the conventional wisdom that handheld gaming units are not simply complements -- they can actually command prices that are on par with their console brethren. Importantly, it would also show that the young adult gaming market is willing to pay a premium for a very high-end gaming device.

For my part, I am inclined to go with the conventional wisdom that the way you really capture this market is to have a low-cost handheld to drive broad adoption. I am also secretly hoping to be proven completely wrong.