Sep 11th, 2008 publishUpdated   Sep 16th, 2008, 11:56 am

In 2005, Gizmondo seemed poised to become a handheld gaming powerhouse competing with the likes of the Nintendo DS and Portable Sony Playstation (PSP). But after the CEO crashed a Ferrari at 200 MPH a bizarre trail was uncovered that led to mafia ties, drugs, fraud, corruption, terrorism and the total collapse, bankruptcy and liquidation of a once up-and-coming company. The company has resurfaced and will offer an Android Gaming handset called the Gizmondo 2 later this year… but does anybody care?

The concept behind the original Gizmondo is a good one: “it was packed with GPS system, the handheld console was given MP3 and video players, gyroscopes for motion sensing, multimedia messaging, and Bluetooth wireless networking for multiplayer games. Players who agreed to watch ads beamed to them over cell phone networks would get a discount on the initial purchase price.”

This was 2005 and it already sounds very Google Androidish. Apparently the device was originally named GameTrac and was a way for parents to track their kids via the GPS technology. They wouldn’t carry around a device just to track them but a portable gaming device? Sure. That was a couple years before and the handset was renamed Gizmondo for its UK launch in early 2005.

It cost an outrageous $400 and had an incredibly pitiful selection of games and was riddled with bugs and flaws.  The European launch was a complete and utter disaster but the company pushed forward and was about to launch the Gizmondo in the United States when everything unraveled.

Gizmondo Directors Stefan Eriksson and Carl Freer resigned. Why? Because a Swedish publication was on the brink of publishing an article showing that Eriksson spent the better part of the previous decade as the leader of an organized crime unit who made money from activities such as kidnapping, bank robberies and black mail. The fact that Gizmondo had lost $300 million dollars in the past 16 or so months became somewhat irrelevant.

But Ericsson disappeared into the United States where it seemed he was plotting to start from scratch… and repeat the same fraudulent behavior that ended in the demise of Gizmondo. That desire ended with a sensational Ferarri crash that led officials on a fact finding mission remniscient of, appropriately, Grand Theft Auto 4.

This entire backstory was covered in a journalistic masterpiece of epic proportions, written by Randy Sullivan of Wired in October 2006. We summarized the main points to catch you up to speed, but encourage you to read the entire 6-page, 6500 word article as its a fun read that comes across more like a movie pitch than real life tech story. Read it here.

How a company can endure such a traumatizing ending and even attempt a relaunch is a complete mystery. But that’s exactly what Carl Freer is doing.

Freer contacted – a fan forum for the device – and conducted a short and to the point interview acknowledging that a device would be out in time for the holidays. Its going to be packing the same punch as the previous Gizmondo but Freer promises that this version will have  ton of extras including a new graphics chip, suites of new games, hardware enhancements and software enhancements.

An “Open Platform” was specifically mentioned in the online interview and Freer was anxious to get developers on board to make Gizmondo 2 a “combined effort”. According to Rich Jenkins, CEO of Media Power, consumers will have to choose between a Gizmondo based on either Android or Windows CE 6.0, as reported on The Nordic Link Blog via Gizmodo. (That last link is Gizmodo not Gizmondo!)

Wow… there you have it: The Gizmondo 2, Android’s first gaming targeted device. Perhaps they should call the Android based version “Gizmondroid”.

Will anyone give the device a chance after the ridiculous drama of GizmondoGate? If the device is priced anywhere near the $99 that Freer is aiming for (it will likely be closer to $199) then it certainly has a shot. Just expect tech experts to be very critical this time around… little things like pitiful battery life and poor game selection won’t slip through the cracks this time.

Perhaps Gizmondo should take the “humorous” approach to regaining the trust, respect and loyalty of investors, critics and consumers: make the innaugural game a Car Racing Game called “Ericsson Escape” where the object is to flee from the cops. Not likely… but boy would it make a good headline!

Above Wii screenshot added for dramatic effect. Did it work?