03/28/2008 02:45 am ET Updated May 25, 2011

Microsoft Takes On iPhone, GPhone With Danger Purchase

Why does Microsoft's purchase of Danger make so much sense? Because it gives the software giant a solid platform in the fast-growing, consumer-focused smartphone market -- without screwing up its business-focused Windows Mobile lineup.

Danger's Sidekicks have caché with young urbanites, but they're not nearly as popular as multimedia devices like RIM's BlackBerry Pearl and Apple's iPhone in the U.S., and Nokia (NOK) and Sony Ericsson devices abroad.

In Microsoft's hands, Danger's phones benefit both from the company's broad software portfolio -- future versions might be able to play lightweight Xbox games, Windows-DRMed video, etc. -- and the massive carrier/retail distribution network MSFT already has for Windows Mobile phones. (And assuming Microsoft's bid for Yahoo eventually goes through, Yahoo's popular mobile software could make the tie-up even sweeter.)

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