Microsoft buys maker of Sidekick and Hiptop smartphones

While Apple continues to rev up its all-conquering iPhone and Google and partners prep Android for a mid-year soft launch Microsoft has swooped in to make an unexpected acquisition.

The colossus of Redmond last night announced it has snapped up Danger Inc the company behind the consumer smartphones known as the Hiptop and (in the US and parts of Europe) Sidekick.

Microsoft’s line is that the acquisition will “strengthen its mobile consumer vision”. And before you can ask if the company ever actually had such a vision Microsoft has recently been making forays into a more consumer-centric approach to Windows Mobile including experimenting with new UIs and allowing hardware partners to push further away from the one-size-fits-all model of the Windows Mobile UI.

Enter the Danger zone: Danger and Microsoft certainly have smiles on their dials after the overnight acquisition but will we see Windows Mobile on the next generation of Hiptops and Sidekicks?

So what exactly does Danger have to offer The House of Gates?

It’s not the revenue stream: while Danger makes its dosh through a cut of the telco’s monthly service fees from customers that pie has been shrinking in the face of new smartphones and last year Danger reported losses of US$28 million (against sales of US$56 million).

It’s certainly not the hardware: the Hiptop devices themselves are manufactured under contract by Sharp and in the case of the Slide Motorola. (Although we’d have to wonder how long it’ll take for Taiwanese giant HTC to claim their slice of the action considering the already close partnership between HTC and Redmond).

No what’s in this for Microsoft is Danger’s ‘mobile Internet platform’ and its inherent focus on the consumer market. Danger’s approach mimics that of RIM’s BlackBerry: a family of devices running a bespoke OS as part of a client-server system that’s licenced to mobile carriers. The telcos sell the devices and airtime to their customers while Danger hosts the server-side operations.

The Hiptop’s microbrowser feeds all page requests through a proxy running on Danger’s servers which pares down the pages into a mobile-friendly format by shrinking images reformatting tables and removing content such as Flash that’s not supported by the browser.

(However email is fetched directly from the server using POP3 or IMAP whereas RIM feeds emails through its gateway in order to vastly compress the size of messages and attachments.)

As anyone who’s used a Hiptop can attest this is a slick recipe for creating a smooth ‘mobile experience’ for the average consumer (although it’s not without its rough edges especially considering the relative complexity and rich content of today’s most popular sites and online forums).

Danger describes its mission as becoming ‘the industry’s preferred mobile Internet platform for connected consumers’ and sees its target audience of ‘connected consumers’ as ‘being between 18-34 urban-minded and Internet savvy’.

It’s no accident that with its Web browsing email and instant messaging support the Hiptp has often been called ‘a BlackBerry for the tweens teens and twentysomethings’. This is clearly a position that Microsoft covets and where it sees the greatest potential for growth when backed by Microsoft’s development and marketing muscle.

But does this mean the nimble Java-based Danger OS which powers the Hiptop family will be deep-sixed in favour of Windows Mobile? Not in the short term and perhaps not at all. Danger has clearly done something very right in Microsoft’s books and that something is centred on the platform and its consumer expertise.

While Microsoft may understandably seek to shift the underpinnings of the OS to one based on the .NET Compact Framework (a subset of the primary Windows .NET system used in coding Windows apps) which is a key pillar of Windows Mobile we’ve got to wonder if Microsoft might reposition Windows Mobile as the OS for more serious business-minded smartphones and put a streamlined version of it – perhaps even one that looks and works like the Danger OS – inside the next generation of Hiptops and Sidekicks.

These devices will of course exploit ties into the ever-growing raft of Windows Live services all aimed to help snare consumers into the online world of Microsoft rather than Google.