Update: That Yahoo thing is going to take some time, but acquisition-hungry Microsoft isn’t sitting idle. They have snapped up Palo Alto, Calif.-based Danger Inc. for an undisclosed amount of money. While they are not giving reasons as to why they are buying Danger, I am guessing that the user experience on Danger is a key factor. Danger, as you might recall, is the company behind T-Mobile’s Sidekick device, and was started by Andy Rubin, now leading the Android charge over at Google. The company raised over $134 million in venture funding from the likes of Mobius and Redpoint Ventures. It had planned for an initial public offering, but the recent downturn in financial markets might have prompted a decision to sell out to Microsoft.
I have followed Danger from its early beginnings, back in the day when I was a reporter at Red Herring. Despite having a great solution, the company never became a big player, highlighting the challenges facing a mobile startup, especially one with consumer ambitions. Of course there was the problem of being a closed environment and not fostering an application ecosystem.
The company still gets about 92 percent of its revenues from T-Mobile USA, and has been losing money. For its financial year ending Sept. 30, 2007, Danger had sales of $56 million and losses of around $28 million.
“The addition of Danger serves as a perfect complement to our existing software and services, and also strengthens our dedication to improving mobile experiences centered around individuals and what they like,” said Robbie Bach, president of the entertainment and devices division at Microsoft, in a statement. Microsoft didn’t outline its plans or the price it paid for Danger when I contacted them.
Update: I just got off the phone with Scott Rockfeld, Group Product Manager at Microsoft’s Mobile Communication Business. I tried to pin him down on why they were buying Danger and what kind of synergies were they expecting. All he would say was “In the short term we will continue the current product lines and we will work on trying to integrate the two platforms.” The motivation, as suspected was Danger’s consumer focus and consumer expertise. Clearly, Microsoft needs help and Windows Mobile has been relegated to the Business segment
31 comments so far
7:48 AM PT
I don’t see the rationale for Microsoft buying this, unless it’s to migrate the Sidekick (which does have a good following) to Windows Mobile. The first thing that MS should do is to put this on CDMA carriers instead of locking it exclusively to T-Mobile.
7:59 AM PT
I think it is more to do with the user interface and manged service expertise. I think Danger is so much superior to what Microsoft has to offer as a UI.
8:27 AM PT
This is about the xbox(handheld gaming) or zune brands(zune phone) and not about UI Om. MS have some good UI designers these days and they have no phone hardware expertise.
8:28 AM PT
Microsoft must really be sweating bullets with Google Android coming soon.
Someone please tell me what actually does Microsoft develop internally that actually amounts to something significant ?
Uncle Fester ( Balmer ) is looking desperate to try and remain relevant.
8:31 AM PT
[...] my recuperating friend Om Malik at GigaOm, I’ve been following Danger from the early days, when Andy Rubin started the company and got backing from some senior VC types to shake things up [...]
8:54 AM PT
[...] Microsoft from shopping! Last week it was all about Yahoo! and UStream.tv and now it’s about Danger, the maker of the Sidekick. It must suck to work at Microsoft, since these purchases usually say to [...]
9:01 AM PT
[...] Microsoft Buys Sidekick-maker, Danger - GigaOM [...]
9:26 AM PT
One of the unique things about Danger that I have always found is their integration with the IM providers like AIM and also the ability to easily send e-mail using the full QWERTY keyboard.
9:56 AM PT
[...] Microsoft cumpara Danger - compania care face Sidekick-ul [...]
10:23 AM PT
[...] advances these days. This morning the software giant said it has agreed to acquire Danger Inc., maker of T-Mobile’s SideKick smartphone, for an undisclosed [...]
10:39 AM PT
@Darren
“MS have some good UI designers these days”
Really? shame they didn’t use some of them on vista. Seriously, where you do you see evidence of good UI design coming from microsoft?
Hari
11:43 AM PT
@Hari Seldon
Vista is a decent OS, from both perspective - visual and functional.
But regarding the acquisition, Microsoft will try to build a solid base in the new apple pie, which is the mobile domain.
So I believe that Danger is not gonna be the last mobile player bought by Microsoft.
Nice article Om.
12:29 PM PT
@Hari, Xbox 360 and the zune and vista ain’t that bad.
12:55 PM PT
Interesting move on MS’s part. Isn’t one of the founders of Danger Inc. in or near a Google board? That would mean a good bit more than UI and network fun wouldn’t it?
2:33 PM PT
@ everyone.
this is a pure consumer play. microsoft has finally realized that it needs to take x-box like approach if it wants to play in the consumer market. i think this is actually a good deal, versus something like Yahoo which is nothing but an expensive shopping trip. This one (danger) can actually work vs Yahoo.
2:58 PM PT
@OM
Isn’t the xbox a bad example. They have shown that they can only target a small known market segment, hardcore gamers. Typical Me_II.
While Nintendo opened up a whole new market segment with the WII.
Now isn’t the iPhone or the Google move the equivalent of the WII for “smart phones”?
Chasing the old small market segment doesn’t seem to be a good move.
3:03 PM PT
I still don’t understand why they would buy Danger. Isn’t MS’s business based on creating software and working with hardware manufacturers to get their OS on those hardware products? Are the fundamentally changing their strategy?
4:28 PM PT
On the sidekick side of things lets just hope they don’t make the sidekick into a windowsmobile. Dangers os is the way to go. Its UI is very friendly and easy to use. Oh and I hope there isn’t major change with the sidekicks due to this. just better apps and camera vid and minor tweaks to the OS maybe but not much at all that’ll make the kick steer away from what it really is.
5:51 PM PT
[...] Microsoft will now also apparently have a hand in the development of devices such as Side-Kick. This will of course have the effect of finally driving people from 2g to 2.5g and through into full 3g, which is perfect as our infrastructure greatly needs investment. We will consequently begin to run WiFi much more on devices, hopefully pushing the gradual jumps into the 700mhz blocks and encouraging both the blending of WiFi and Bluetooth and the development and growth of WiMAX. [...]
1:42 AM PT
Great deal - finally sanity remain and M’Soft went after real product than brand!
7:00 AM PT
[...] 12, 2008 at 3:00 pm · Filed under Uncategorized Om’s article on the Sidekick purchase by Microsoft held for me a real gift at the end, where he says that [...]
8:00 AM PT
Microsoft is becoming a black hole.
9:29 AM PT
[...] mood. First they offered up $45 billion for Yahoo (not enough for some!). And then there was that Danger acquisition. But how much did they spend on the Palo Alto-based company started by Android leader Andy Rubin? [...]
2:45 PM PT
[...] has details here and [...]
3:35 PM PT
[...] 11:55 AM Om Malik / GigaOM: Microsoft Buys Sidekick Maker, Danger [...]
6:24 PM PT
Why are the buying all these companies? What’s next - Motorola’s mobile phone sector?
1:14 AM PT
if you get a pc thats fast and is belt around vista then you learn to love it visualy and functionality it runs so fast and nice using xp now is like talking to a dirty old man. and as for the sidekick, microsoft will mix mobile 7 and danger os 4.6 and come out with a gaming phone/video phone/zune phone that you can get on your gamertag and talk to your friends when there on there xbox 360’s send them pics voice mall and it can hock up to your 360 ,send music to the sidekick from your zune through wifi i think they want to do some 3d games and head to head games if you have a sidekick then you know it has some really fun games and some of them you can play with other people with sidekicks anywhere no need for wifi like psp will see soon.
5:09 AM PT
[...] Microsoft Buys Sidekick Maker, Danger [...]
6:41 AM PT
its hard come out this day with a new phone especially when theres the iphone but if you take a phone like the sidekick which its great for texting, internet, and making phone call why not take it to the next level i mean people already know the sidekick they know all the thing that this phone can do. your are not intruducing a brand-new device, people know this phone all you got do its take to the next level. thats what i think microsoft its trying to do. i may be wrong but these are my thought. all of you have a great day and thank you!!
4:33 PM PT
[...] Microsoft Buys Sidekick-maker, Danger - GigaOM [...]
9:15 AM PT
Ok Every Body is all pissed because microsoft has brought Danger but little do people really know that microsoft has 5 times the capability as Danger .
The sidekicks will not only have windows mobile but the phones will have better camera’s can people say 3.0 mega pixel an video camera also lets not forget the possibility of touch screen or also 3g ++++ Network.
Yes People are not ready for the sidekick to stop being as user friendly but the fact remains technology is changing an the sidekick is about to change with the times and I do believe it has the potential to kill the I phone .
I being a user of windows mobile and danger as well as knowing the mac system know that phones are about to woww people.
So folks dont be alarmed because it can only get better and if it is worse hey its ur money dont buy it…
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