Microsoft Buys Danger

Yesterday, Microsoft proved that it was not putting all of its eggs in one basket with its unsolicited $44.6 billion dollar bid for Yahoo. Danger, the maker of the popular Sidekick from T-Mobile, was purchased for an undisclosed amount of money. Some people estimate as much as $500 million dollars, given that Danger has raised over $140 million in funding.

Danger was set for an IPO in an effort to raise another $100 million. Last year, their revenues increased 14 percent to $56.4 million but net loss doubled to roughly $12 million dollars. Although nearly 1 million T-Mobile subscribers have Sidekicks, Danger still isn’t profitable. Which raises the question: Why would Microsoft buy a failing company?

Microsoft feels Danger has a greater ability to attract young customers (indeed it does, even Soulja Boy raps about his). More importantly, Microsoft is struggling against the iPhone’s huge presence and rapidly growing sales. In addition, Google is preparing to launch their open-source Android mobile operating system. Danger’s OS supposedly can help Microsoft stay a step ahead of its competitors.

I think that if Microsoft uses its newfound resources well, it will a player in both the high- and low-end phone markets by keeping Windows Mobile in the business sector and utilizing Danger OS for personal SMS, Internet, instant messaging and the like. What do you think Microsoft will do with Danger? How do you think this acquisition will affect the two mobile OS’s?