How Much Did Microsoft Pay For Danger?

[qi:110] Update: Microsoft is in some of kind of spending 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? No one at Microsoft is talking, nor are the guys at Danger. So I spent most of my day yesterday dialing-for-information, and have come up with the price from a fairly solid source.

Microsoft spent a cool half a billion dollars ($500 million) on Danger, making it a nice payday for investors of the Sidekick maker. The half-a-billion number was first floated by good buddy Erick. While some of the early investors got modest returns, I am told that the later-stage investors made out like bandits. It has been reported previously that the company had raised $134 million in venture backing, but in reality it’s closer to $225 million $144 million. (Folks from Danger called and insisted that they have raised $144 million to date, and pointed to their S-1 filing, and for now I am going to defer to the published numbers.)

The deal’s big sticker price is intriguing — leading me to believe that Microsoft wants to pull an Xbox on its mobile phone business. Having realized that its traditional approach is going to relegate it to business market, Microsoft is taking a non-Microsoft tact, just like it did in the gaming console business. The reason for this deal is more than just acquiring “consumer expertise,” as the company kept repeating yesterday. Danger’s software-as-a-service technology can offer “Microsoft Services” such as Search, Windows Live Mail and Messenger on the Danger platform, using it to compete with Google Android.

I think if Microsoft wants to be really bold, they should go for a radical strategy: Instead of controlling the platform, they should make it open, thereby making it more attractive to developers. It would be the only way it can actually stay competitive with Linux-based platforms like LiMo.

Given that there are a couple of devices already on the market that use Danger software (unlike Android’s prototypes), Microsoft might actually be able to get some disgruntled Android developers switching to its platform.

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