MS/Danger deal at $500m, hardware involved?

Microsoft's acquisition of Danger is worth approximately a half billion dollars, according to a source speaking with Om Malik about the deal. While Microsoft has remained secretive about the financial terms of the buyout, the company is now believed to have spent as much as $500 million to purchase the designer behind the Sidekick and its software. The tipster does not explain why Microsoft had been willing to make the high offer, which is unusual for acquiring a firm that does not manufacture its own hardware.

However, the price prompts speculation that Microsoft is intent on using Danger's resources for a completely in-house phone or messaging project. Microsoft's move brings the company into the Entertainment and Devices division that handles the Xbox and Zune teams rather than the Windows Mobile group, suggesting that the high price was to secure a company that could help develop either a radically different mobile OS or a unified hardware and software platform rather than simply update Windows Mobile to include new features.

Such an approach would likely let Microsoft offer tight integration with Windows Live services such as Mail and Messenger, Malik suggests, similar to Google's approach to its own services in its Android mobile operating system.

Microsoft in recent years has steadily turned away from its previous strategy of developing a general platform for non-computer hardware. The company's Zune is often regarded as the best example of the approach and saw Microsoft switch from encouraging the use of Windows Media Player and its PlaysForSure licensing system for copy protected music to releasing its own portable media device with proprietary software both on and off the handheld, rendering it incompatible with other devices and taking marketshare away from partners.

Filed under: gadgets
Other story tags: Microsoft, T-Mobile, Windows Mobile, Zune, Xbox, Sidekick, Windows Media, Danger