Experts say that when people are depressed, their spending tends to increase, in hopes of making themselves feel better. The same must be true for corporations, because when depression sets in around the economy, companies seem to go shopping. If this is the case, Microsoft (Nasdaq: MSFT) must really be down in the dumps.
Right on the heels of its monster bid for Yahoo! (Nasdaq: YHOO), Mr. Softy is letting loose again and picking up mobile-software company and one-time IPO candidate Danger. Before Microsoft came along, Danger was on a path to raise roughly $100 million through its own public offering, but now investors in the startup will have to settle for a check from Microsoft instead.
Late last year, I wrote that Danger had a problem -- it was a very small fish going up against some big sharks in the mobile world. Its software runs the popular Sidekick device from Deutsche Telekom's (NYSE: DT) T-Mobile, but device makers such as Research In Motion (Nasdaq: RIMM) and Nokia (NYSE: NOK) are pressing hard into the consumer niche that is attracted to messaging and email-centric devices.
But now that little Danger has befriended the biggest shark around, its software platform will have more staying power with all of that Microsoft muscle behind it. It's worth noting that Danger was started by Andy Rubin, the mind behind the Android operating system that Google (Nasdaq: GOOG) acquired in 2005 in hopes of opening up the mobile-application world. But I seriously doubt that Microsoft has visions of open platforms with the Danger acquisition.
There's plenty of speculation, in fact, about why the Windows behemoth would want Danger, since Danger's platform is not nearly as developed or widespread as Windows Mobile. But Danger's software centers on communication and the "infotainment" that's popular with younger demographics -- not your suit-and-tie business class.
What's more likely is that Microsoft sees Danger as a relatively cheap way to beef up its presence among a mobile-software demographic that has yet to be mined very deeply. And bringing Danger onboard may also augment efforts in mobile search, the next frontier beyond online search, where Microsoft is getting handily trounced around the world.
Grabbing a significant share of the search market seems to continually escape Microsoft, and the Danger pill is an easy one to swallow -- even if it only turns out to be a placebo.
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