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
44 thoughts on “Microsoft Buys Sidekick Maker, Danger”
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.
“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?
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?
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.
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.
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?
They want to launch Windows Mobile 7 on a single mobile chassie (which they own). They’ll likely work with other OEMs to run WM7 as Communications Server (the upgrade to Exchange) becomes the email platform most companies are on.
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.
Great deal – finally sanity remain and M’Soft went after real product than brand!
Microsoft is becoming a black hole.
Why are the buying all these companies? What’s next – Motorola’s mobile phone sector?
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.
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!!
They purchased the company to build a new oversized phone with touchscreen UI. They did not purchase Danger to take over the Sidekick product line.
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…
This partnership will impact iPhone sales at the enterprise level. Danger is being tasked with designing a new chassie for Microsoft that takes advantage of the integration of Office Communicator into Windows Mobile 7. The Windows Mobile phone will not be the Sidekick. It’ll be an entirely new phone and have huge impact in the business world.
Has anyone had problem/problems with the SideKick Slider melting while connect to the charger? Mine did and T-Mobile won’t replace.
MS is now looking for NetBSD developers?