Is Xero The Second Coming Of Gizmondo?

Rumors, Conspiracies, etc.

from the run-away dept

About a month ago, there was some buzz in the blogworld that there was yet another MVNO (a mobile operator that uses someone else’s network) about to hit the scene, called Xero, with $300 million in funding. This seemed bizarre because the MVNO space is rapidly getting very crowded, and anyone just starting now is probably going to face a lot of trouble — especially as it was quickly becoming clear that it’s tough to make money as an MVNO. This shouldn’t surprise anyone. After all, the rationale for MVNOs is usually to fill a niche that the big mobile operators don’t find worth targeting — in other words, one they don’t believe is that profitable. Thus, it makes sense for a smaller operation looking for more targeted subscribers or an operator who really has some outside advantage (such as an important relationship). However, when MVNOs try to go big, they risk competing with their own network providers. In other words, any really successful MVNO is likely to piss off (or get bought by) whoever is supplying their network, if they get too big. Not necessarily a fun position to be in.

Still, some people believe in the space, and if Xero is to be the next hyped up entrant, so be it. However, there’s a bit more info coming out today concerning the folks behind Xero, and it may be cause for a bit more skepticism. First, it appears their “differentiator” will be offering “free” airtime, if you’re willing to accept advertisements on your mobile phone. If that sounds familiar, it’s because that was the original announced business model for the infamous Gizmondo device. So, it’s probably worth noting that Xero’s management team was last seen running parts of Gizmondo. Yes, Gizmondo. The tiny company with an expensive gaming device (even when subsidized by ads) with almost no compelling games — that was found to be paying executives millions of dollars, giving them expensive fancy cars (whoops) and with a less than squeaky clean police record. After all of this, of course, the company went bankrupt, without much to show for it (the executives, on the other hand, appeared to make out well). The guys running Xero don’t appear to be the same folks who were accused of questionable behavior at Gizmondo, but it certainly does raise some questions about who is giving these guys $300 million to basically try the same business plan all over again — except with mobile phones instead of a portable gaming device.