Danger, Danger, Will Telco!

Microsoft makes a buy for Danger Inc., source for the Sidekick phone. Danger has about $50m in revenues and its biggest outlet is T-Mobile. For Microsoft this is small potatoes. Bill could have bought this firm out of his own petty cash fund. But it does signal a continuing effort by Microsoft to invest in the mobile space. Which tends to signal something I will get to after this –

Microsoft Corp. today announced it has entered into an agreement to acquire Danger Inc., the company responsible for the software and services powering many popular consumer handsets. The acquisition will align Danger’s nearly 10 years of expertise in the mobile consumer space with Microsoft’s vision to provide innovative and compelling mobile experiences to a growing base of customers.

“Microsoft is a global leader with our Windows Mobile software and expanding mobile services,” said Robbie Bach, president of the Entertainment and Devices Division at Microsoft. “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.” The Palo Alto, Calif.-based company provides services that allow people to keep in touch, stay organized and keep informed while on the go through real-time mobile messaging, social networking services and other applications - all blended together on a single phone that is intuitive and customizable.

“Danger continues to provide an effortless and fun mobile experience for consumers,” said Henry R. Nothhaft, chairman and CEO of Danger Inc. “Now by combining our uncompromised application software and powerful back-end service with Microsoft, we can expand our innovative service offerings even further and take mobility to a new level.”

And…

Defining the Mobile Experience
Through focused efforts Danger has successfully delivered a software and services platform to the mobile mass market. Applications on Danger-powered handsets include HTML Web browsing, instant messaging, games, multimedia, social networking, Web e-mail and personal information management applications.

Related…

Tim Bajarin, president of Creative Strategies of Campbell, said the acquisition provides further evidence that Microsoft is mirroring the thinking of Apple, which has married software and hardware to make simple, fashionable consumer products like the iPod and iPhone.

“Sometime in the last two years Microsoft fundamentally woke up and realized that even though they’re a software company, they had to use hardware to control their destiny,” Bajarin said. “That’s why it got into the X-Box, but also why it brought out the Zune even though 20 other companies are using Microsoft software on mp3 players. It’s becoming a very important part of Microsoft’s strategy.”

Microsoft’s Rockfeld downplayed that interpretation, saying that Danger doesn’t make hardware. He also deflected a question about whether consumers might one day see a “Zunephone.”

“We obviously will react if consumers ask for it,” Rockfeld said, “but at this time there’s no plans to make hardware.”

The deal is also a sign of the intense competition to provide operating systems for the next generation of smart phones. Symbian currently heads the field, powering all of Nokia’s smart phones. But many phones operate on systems based on Linux or software from Apple, Windows Mobile, Palm and Research in Motion.

First of all how quickly the drones assimilate. Did you catch the ‘Software + Services’ subdural pronouncement by Danger?

I am starting to notice some trends here that might catch the Telcos flat footed. That is the hardware device side is consolidating. Not only that but concentrating in companies that are not in the realm of a traditional Telco supplier. Given a couple of years the carriers just might find themselves at the mercy of the like of Microsoft, and Nokia as the only proprietary suppliers around. The carriers will adopt Android kicking and screaming. But their options on the other front might be just as limiting. Microsoft would love to be in a position to tell AT&T its $249 + 30% of message stream — And you will like it!

Danger Inc press release.
Mercury News article.