updated 10:40 am EST, Mon February 11, 2008
Microsoft Buys Danger
Microsoft today revealed that it was acquiring Danger Inc., triggering a shift in the mobile phone business. The deal's terms have not been disclosed but will see the smaller firm, best known for the software powering Sidekick messaging phones, folded into the Entertainment and Services Division at Microsoft. The buyout will help Microsoft enter the "consumer space" for phones and will simultaneously let Danger expand its partnerships to other companies. Neither firm has said when they expect the deal to be approved by US officials.
The acquisition revives talk of a possible Zune phone. Although Microsoft has previously denied any plans in the area, the Entertainment and Devices division is almost exclusively limited to consumer hardware such as the Xbox 360 game console and the Zune line of media players, with the bulk of Microsoft's mobile OS development taking root in its separate Windows Mobile project. Microsoft also already has Windows Live messaging features built into the Xbox 360's software interface, reducing the need for Danger's help.
A rumor early last year initially suggested that a Zune-branded phone would be available as early as December but has since been quashed, with only the second generation of Zune media players launching in the same timeframe.
Microsoft has increasingly turned to developing its own devices rather than following its past practices of licensing software to others. Although it had developed its PlaysForSure program to encourage the spread of Windows Media and fight the dominance of iTunes and the iPod, it introduced the Zune in November 2006 with a proprietary store and file format that ultimately forced the closure of MTV's URGE and other music stores that had expected cooperation rather than competition from Microsoft. The Zune players themselves are also believed to have taken share from PlaysForSure-capable devices rather than Apple.