Microsoft Buys Danger; Is this Zune for Windows Mobile?

Microsoft recently announced that it's buying Danger Research, a mobile phone platform and service provider that's mostly known for its popular T-Mobile Sidekick device. While some pundits see the acquisition as the harbinger of the often rumored ZunePhone, Windows Mobile licensees might be wondering if Microsoft plans to compete directly with them the way it did with mp3 device makers who bought into Microsoft's Plays for Sure program. If so, they should be worried.

Launched with much fanfare, Plays for Sure was supposed to be Microsoft's answer to the iPod and iTunes juggernaut. But over time Microsoft grew increasingly frustrated with the inability of Plays for Sure licensees to dislodge Apple's iPod/iTunes tandem from its perch atop the digital media market. In response, Microsoft launched the Zune and Zune Marketplace to compete directly and, hopefully, more effectively with Apple. But in doing so, Microsoft also left its licensees out to dry. By most accounts, the Zune has done little to diminish Apple's media player marketshare while decimating the sales of Plays for Sure devices.

Now, with the iPhone, Apple is making another foray into a market that Microsoft wants to own. And despite Steve Ballmer's famously dismissive prediction of Apple's chances for success ("There's no chance that the iPhone is going to get any significant market share. No chance."), Apple is making serious inroads in the smartphone market, and is even gaining traction among Microsoft's core business customers. Despite its widely noted shortcomings, the iPhone is a game changer and clearly has Microsoft worried.

Now comes the Danger acquisition. While Windows Mobile has a large installed base, it is primarily considered a business platform and its interface is considered by many to be overly complex and particularly consumer-unfriendly. In fact, over the past year or so, several device makers launched consumer-oriented WinMo-based phones but went to the trouble of reskinning the interface to make it more usable. This poses a challenge for Microsoft. If the iPhone continues to gain marketshare, will Ballmer and company decide to build "the whole widget" the way they did with Zune/Zune Marketplace? Will Windows Mobile licensees suffer the same fate as Plays for Sure licensees? Only time will tell. But those are questions Windows Mobile licensees might want to be asking themselves right now...