Microsoft: a danger for Skype users?

Jun 17, 2011 By Sharon Pian Chan
Skype

Long before the iPhone, the Sidekick was the cool mobile phone. It was to the iPhone and Android what Paris Hilton is to Kim Kardashian - version 1.0.

Danger, the company that made the Sidekick, had created an entirely new kind of phone, one that could surf the Web, instant message friends and attract the Us Weekly crowd.

When bought Danger for $500 million in 2008, many hoped the merger would put rocket boosters on the Sidekick.

Instead, joining Microsoft turned out to be a pin prick that sent Danger whizzing around the room like a balloon losing air.

On May 31, T-Mobile USA, which sold the Sidekick, and Microsoft ended the Danger wireless service. The Sidekick brand name will live on with other T-Mobile phones, but without the guts and unique device that won over believers in Danger's earlier days.

Danger's fate casts a long shadow today as Microsoft prepares to consummate its $8 billion purchase of the new hotness, , a Luxembourg-based . Although Danger and Skype are decidedly different companies, there are parallels. Both are hyper focused on consumers, and both have a strong startup culture. The similarities make Microsoft's experience with Danger all the more relevant to its pending assimilation of Skype.

When the Sidekick launched in 2002, the BlackBerry and Palm Treo were the most popular Web-connected mobile phones, and they were mostly for business execs. The Sidekick was the first breakout smartphone success for noncorporate types who just wanted to message their friends.

"It was innovative for its time," said Will Stofega, a mobile analyst at research firm IDC.

The Sidekick pioneered many features that are now de rigueur on mobile phones.

App Store? Danger created a store for developers called Catalog, before the App Store for the .

Beloved by celebs and hipsters? Hilton and Lindsay Lohan were early Sidekick users. MC Hammer used to visit the Danger office in Palo Alto, Calif., to troubleshoot his Sidekick, former employees said. Dallas Mavericks owner Mark Cuban and skateboarding mogul Tony Hawk were avid users.

Cloud computing? Before people even called it the cloud, the Sidekick service was storing messages, photos, apps and address books on servers.

"Consumer electronics is a world filled with regret," said Zz Zimmerman, a former manager at Danger. "You see this gigantic vision and you ship with 1 percent. With the (first Sidekick) hiptop I don't think anyone felt that way. I think we shipped 90 percent of what we wanted. We had this super useful product."

HIPTOP

Started in 1999, Danger invented the hiptop, which had a black and white screen that swung around to reveal a full keyboard underneath. A dial on the side scrolled through contact lists, messages and Web pages. The software switched quickly between multiple instant-messaging programs, contacts and email. It even had a small attachable camera. The company was named for the 1960s TV show "Lost in Space" and its robot that kept repeating the line, "Danger Will Robinson."

Danger showed off the device at the Consumer Electronics Show in January 2002 by dropping a bowling ball on the phone, then firing up a new phone and downloading all of the smashed phones' contacts, photos and messages from the cloud.

The first major U.S. carrier to sell it was T-Mobile USA, which branded it the Sidekick and launched it in October 2002. Even by today's standards, the voice and data plan was surprisingly affordable, attracting customers younger than 35. T-Mobile offered the device for $199 with a $39.99 monthly plan that included all-you-can-eat data and 1,200 minutes of voice calls.

When the company launched the Sidekick 2 in 2004, T-Mobile ran an ad overflowing with celebrities - Hilton and rapper Snoop Dogg messaged each other on a Sidekick about their laundry. Many in the hip-hop community replaced their pagers with the Sidekick as their messaging device of choice.

Bridging the def and deaf, the Sidekick also became the communication device of choice in the hearing-impaired community.

The company even made two limited-edition Sidekicks, one by urban artist Mister Cartoon and the other by fashion house Juicy Couture. NBA player Ray Allen, then with the Seattle Sonics, called in a favor to get one because it was not immediately available in Seattle.

The phone had drawbacks. The design was clunky, and surfing was slow because the wireless network was running older technology.

T-Mobile was the only major national carrier that sold the Sidekick, and its customers represented 92 percent of Danger's business.

Danger made most of its money by receiving a cut of the service plan from the carrier. Danger also sold apps and shared that revenue with developers.

The number of Sidekicks sold grew from 136,000 to 923,000 from 2004 to 2007. That was a wafer-thin slice of the estimated 80 million smartphones shipped in 2006, but the fan base was dedicated.

The company lost $12 million on sales of $56 million in 2007, according to filings with the Securities and Exchange Commission, and had about $13 million in cash. By then, Danger knew Apple was preparing to launch the iPhone. As Danger prepared to go public (as Skype was poised to do this year), Microsoft swooped in and bought the company for $500 million in April 2008.

What happened next changed the course of Danger and phone development at Microsoft. Asked for its version of events, Microsoft declined to comment for this story.

T-Mobile released a statement saying, "Data services as of May 31st, are no longer available on Sidekick devices with the Danger Service." People with Sidekicks will be able to make phone calls and send text messages, but they won't be able to access the Internet or receive email.

For at least some former Danger employees, the acquisition was exciting news. The company kept its office in Palo Alto, and the hope among the Danger ranks was that Microsoft would use its vast resources to help the device expand into the mass market.

But they said they quickly realized that Microsoft bought the Sidekick team to put to work on its smartphone project, the Kin, and that the work cultures and environment were different.

Microsoft executives repeatedly told members of the Danger team that they would have access to a "pantry of Microsoft software," some former employees said. But it took five hours to build experimental features instead of the five minutes it used to, slowing innovation to a crawl, said Zimmerman, the former Danger manager.

The renegade culture of a startup clashed with the corporate culture of Microsoft. In one example, a Microsoft manager sent emails that ended with "BOOYAH" in giant type, Zimmerman and another former Danger employee said.

Microsoft managers set up an underground Twitter hashtag #TMDP, which stood for "truly, madly, deeply," a former Danger employee said. To some Danger employees, Microsoft seemed like Phil, the dad on "Modern Family" always trying a little too hard to be cool around his kids.

Some former Danger employees remember rampant mocking of Microsoft corporate speak during meetings - via instant messaging on their Sidekicks, of course.

A separate Microsoft team was working on Windows Phone 7, and it was confusing to the outside world what exactly Microsoft's mobile strategy was.

When the team launched the Sidekick 3 in 2006, the new device barely lost any weight from the old model. Apple began selling its first iPhone a year later.

In October 2009, some Sidekick users lost access to their messages and address books, which was eventually recovered. Sidekick owners, including Hilton, savaged Microsoft on Twitter. Microsoft apologized and T-Mobile gave affected users $100 gift cards.

Microsoft launched the Kin in May 2010 with a thud. The phone tried to make social networking its core function, but it had fewer features than the Sidekick had.

The Kin also was hobbled by the lack of an App Store. And the pricing that the carrier, Verizon Wireless, had set was higher than what the Sidekick service had cost. Zimmerman walked into a Verizon Wireless store to check out the phone, and he said the salesperson steered him elsewhere.

Microsoft pulled the plug on the Kin less than two months later.

A year later, Microsoft launched Windows Phone 7. As Microsoft began shutting down the Danger service this year, former Danger workers were absorbed into other Microsoft teams, according to former Danger employees. A skeletal team still works at the Danger office in Palo Alto, they said.

Stofega says the mobile industry needs another Danger to introduce creativity. "There needs to be a startup, a company that has nothing to lose and everything to gain," he said. "Now everyone has decided on the black slab of metal. ... I wish someone would take a chance. It's almost like everyone is just a follower."

On May 31, current and former Danger employees gathered in the cafeteria in the Palo Alto office to bid the Danger service farewell, then moved to Antonio's Nut House, a bar down the street.

Danger employees have scattered. The bulk went to work at Google for the Android group. One of the original co-founders, Andy Rubin, built the mobile operating system Android, which Google acquired. Android, with 100 million users, now is the fastest-growing smartphone operating system.

T-Mobile has launched a new 4G Sidekick device under the Sidekick brand name. It runs on Android.

DANGER TIMELINE

Danger 1999: Andy Rubin, Joe Britt and Matt Hershenson start company.

October 2002: T-Mobile USA begins selling hiptop device, branded as Sidekick.

April 2008: Microsoft acquires Danger for $500 million in cash.

October 2009: Danger service has significant outage, and Sidekick owners briefly lose access to messages, address books and photos.

May 2010: Microsoft launches Kin, a smartphone for social-networking tweens.

June 2010: Microsoft stops selling Kin.

October 2010: Microsoft begins selling Windows Phone 7 mobile-operating system.

May 2011: Microsoft shuts down Danger service that ran previous T-Mobile Sidekick devices.

Explore further: Venture investments jump to $9.5B in 1Q

3.3 /5 (3 votes)
add to favorites email to friend print save as pdf

Related Stories

T-Mobile halts Sidekick sales after data loss

Oct 12, 2009

US wireless carrier T-Mobile temporarily halted sales of the Sidekick mobile phone Monday after a server failure caused many customers to lose personal data such as contacts and calendar items.

Microsoft says it can restore wiped Sidekick data

Oct 15, 2009

(AP) -- There may be a happy ending after all for owners of Sidekick phones who thought they might have permanently lost contact numbers and other personal information they had put on the gadget.

Sidekick's lost data gone for good

Oct 12, 2009

(PhysOrg.com) -- Sidekick users have been without some of their services for days, and have just been told by the company, T-Mobile, that for some users their data may be lost forever due to a server error ...

Some Sidekick users may recover data: Microsoft

Oct 13, 2009

Microsoft said Tuesday that some Sidekick mobile phone users may recover personal data such as contacts, calendar items and digital photos believed to have been permanently lost in a server failure.

Recommended for you

Venture investments jump to $9.5B in 1Q

7 hours ago

Funding for U.S. startup companies soared 57 percent in the first quarter to a level not seen since 2001, as venture capitalists piled more money into an increasing number of deals, according to a report due out Friday.

Weibo IPO below expectations, raises $285.6 mn

Apr 17, 2014

Sina Weibo sold fewer shares than expected in its US IPO which was priced below expectations ahead of a Thursday listing that takes place after tech selloffs on Wall Street.

'Chief Yahoo' David Filo returns to board

Apr 17, 2014

Yahoo announced the nomination of three new board members, including company co-founder David Filo, who earned the nickname and formal job title of "Chief Yahoo."

User comments : 4

Adjust slider to filter visible comments by rank

Display comments: newest first

33Nick
not rated yet Jun 17, 2011
Microsoft has a graveyard of projects, bought companies and strangle held competition. Buying Skype will most likely not change their past behavior. The problem is that Microsoft hasn't innovated since the 80s. All they have done since consists of buying, incorporating and selling platforms. Skype will probably be dismantled down the line and bits and pieces will find it way into Windows 10, 11, etc.

I switched over to Oovoo a while back and found it to be what Skype should have become today. I fear Microsoft will do no better with Skype than with Danger, or any of the other products it has come up with over the last two decades. It's just too big and out of touch with reality for what I need as a user.
Gilbert
5 / 5 (2) Jun 18, 2011
Yup, not just Microsoft though... it really looks as if Apple is the new Microsoft, (IMO sadly, as I don't really care for Apple products).
This always happens as soon as Engineers/ Scientists/ anyone with an ability for creativity,

gets some money and popularity, the schoolyard jocks come and take their toys away ( Marketers, Accountants, Economics and Business majors ) (Microsoft has been a swarm of jocks since around 1995).

Now Apple is gathering an even bigger swarm, Google is managing to filter them out of their job applications.... for now, Mozilla seems to have hit a wall, or maybe is cowering in the corner, the big players have already managed to lock linux away in the lan cafe... and Microsoft has just seen open office in the corner of it's eye. Look out Oracle :(
Norezar
4 / 5 (1) Jun 18, 2011
When M$ butchers Skype something else will pop up to replace it.
epsi00
not rated yet Jun 18, 2011
When M$ butchers Skype something else will pop up to replace it.


It's Oovoo as cited in a post above. Same functionality. I will never use Microsoft products. They can't get their own cameras to work with their software, how are they going to administer skype? make it into a microsoft product and kill everything that made it successful so far.

More news stories

Under some LED bulbs whites aren't 'whiter than white'

For years, companies have been adding whiteners to laundry detergent, paints, plastics, paper and fabrics to make whites look "whiter than white," but now, with a switch away from incandescent and fluorescent lighting, different ...

Researchers uncover likely creator of Bitcoin

The primary author of the celebrated Bitcoin paper, and therefore probable creator of Bitcoin, is most likely Nick Szabo, a blogger and former George Washington University law professor, according to students ...

Continents may be a key feature of Super-Earths

Huge Earth-like planets that have both continents and oceans may be better at harboring extraterrestrial life than those that are water-only worlds. A new study gives hope for the possibility that many super-Earth ...

Researchers successfully clone adult human stem cells

(Phys.org) —An international team of researchers, led by Robert Lanza, of Advanced Cell Technology, has announced that they have performed the first successful cloning of adult human skin cells into stem ...