Intellivision II was designed first and foremost to be inexpensive to manufacture. Among other things, the raised bubble keypad of the original hand controller was replaced by a flat membrane keyboard surface. However, because many Intellivision games had been designed for users to play by feeling the buttons without looking down, some of these games were far less playable on Intellivision II.
Instead of an internal power supply like the original system had, the Intellivision II would use an external AC adapter. Its main drawback, however, was that it was a non-standard power supply — running on 16.2V — meant that if the AC adapter was lost or damaged, the system could be rendered useless, as replacement power supplies for that particular voltage requirement were not readily available. It is unknown whether Intellivision II AC adapters were sold separately.
Mattel also changed the Intellivision II's internal ROM program (called the EXEC) in an attempt to lock out unlicensed 3rd party titles. To make room for the lock-out code while retaining compatibility with existing titles, some portions of the EXEC code were moved in a way that changed their timing. While most games were unaffected, a couple of the more popular titles, Shark! Shark!, and Space Spartans, had certain sound effects that the Intellivision II reproduced differently than intended, although the games remained playable. Electric Company Word Fun did not run at all and INTV's later release Super Pro Football has minor display glitches at the start, both due to the modified EXEC. Mattel's attempt to lock out competitors' software titles was only temporarily successful, as the 3rd-party game manufacturers quickly figured out how to get around it.
Source: Wikipedia, "Intellivision", available under the CC-BY-SA License.