RIM Paid $8.3M for Dash: Proof That Hardware Is a Risky Business

dash_express_stock1Research In Motion (s rimm) bought Dash Navigation in May for an undisclosed price, but yesterday an investment adviser did the math and stated on his blog that the BlackBerry maker paid $8.3 million for the navigation company. Davis Freeberg combed through Research In Motion’s SEC filings and its first-quarter fiscal 2010 conference call in June, and laid out his assumption that Dash was purchased for far less than the $42 71 million it raised from venture investors. Does the Dash failure mean doom for all specialty hardware companies hoping to build devices for the web? Are Slacker radios or the Kindle (s amzn) destined to flop?

Dash started out making a web-based navigation device that offered directions as well as user recommendations and real-time traffic information based on data gleaned from other Dash devices on the road. User adoption was slow, likely because the device carried a $600 price tag (later reduced to $399), but the service won praise from many reviewers, including Om. The navigation device was designed with true mobile web access and interactivity in mind, but sales were sluggish. In November, the company cut 50 jobs and said it would stop making hardware and would focus instead on licensing its software.

When it acquired Dash in May, RIM kept the details under wraps — even its 6-K filing with the SEC doesn’t mention Dash by name — but news of the deal broke on June 4. RIM did not return calls for comment on this story. However, if Dash earned its investors so little, that may indicate that connectivity is the key rather than a special-purpose device for a given task. The Kindle has an iPhone app, while Slacker, which also makes a web-connected radio, has several radio apps for a variety of mobile phones. For these companies pushing a special hardware platform, the issue becomes whether the experience on the specialized device is worth the cost of buying and then toting another hardware platform. In Dash Navigation’s case, it was not, which is why RIM got such a bargain.