Microsoft purchases Danger

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In a move that shocked virtually everyone, the Redmond based software company purchased the mobile phone company Danger who’s lone product is the SideKick. Some speculate that Microsoft is trying to compete with the likes of Apple and Google by purchasing a ready made market of young mobile phone users.

However, many pieces of this puzzle don’t seem to fit as Microsoft has its own highly successful mobile operating system and with this purchase is essentially just buying a software company that doesn’t manufacture anything. If they are doing this to create the Zune phone, then this also makes no sense as the form factor is decidedly different between the two devices. As the previous founders of Danger ran off to the Google Android project there is speculation that Microsoft purchased the company for no other reason than its cheap price and/or to keep it out of the hands of Google which had been speculated to be vying for the company since last summer.

As of this moment there are about 1.2 million SideKick customers who are mostly on the T-Mobile network. Its revenues just eclipsed the 50 million mark but profitability still eludes the Palo Alto based company. They have had numerous problems with the manufacturing side of the business which has most recently been taken on by Motorola from the previous disastrous relationship with Flextronics.

The device has had a host of problems most notably its reliability as two SideKicks must be manufactured for every customer based upon warranty returns. Microsoft could be seeing them as a diamond in the rough, thinking that if the manufacturing process can be improved and if its next version of the Windows Mobile OS can be adapted to the device it could become a successful foray into the mobile phone landscape, something they have been looking to do for some time.

Update: The sale price is reported to be in the $500 million range and is equal to how much loose change Bill Gates found in his sofa recently. My guess of $12.50 and a coupon for half off an oil change at Jiffy Lube was misguided and grossly inaccurate.