Microsoft Buys Sidekick Maker, Danger
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
Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.
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.
Companies will upgrade to Communications Server within two years. This phone will be offered by Verizon and positioned as the business alternative to the iPhone. Owning the OEM allows Microsoft a better opportunity to compete in the enterprise. The primary value proposition of this phone will be the integration of Office Communicator into the operating system (with ability to type) and it will also allow 3rd party applications via an apps store.
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.
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.
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.
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.
@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
@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.
@Hari, Xbox 360 and the zune and vista ain’t that bad.
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?
@ 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.