15.905 Technology Strategy

Technology and Strategy Danger, Inc. Michael A M Davies 16th March 2009

15.905 Technology Strategy

Three key questions

•  Who are the most attractive potential partners to design and manufacture devices for Danger?

•  Who amongst the worlds' many mobile network operators, and where and when, should Danger be targeting to create mobile data services based on its platform?

•  How can Danger develop trust and collaborate effectively with prospective partners who are also in fierce competition with each other?

Michael A M Davies mamd@mit.edu 16th March 2009, Page 2

15.905 Technology Strategy

Combining a ‘nano-PDA’ with data connectivity

Michael A M Davies mamd@mit.edu 16th March 2009, Page 3

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An ‘end-to-end solution’

Michael A M Davies mamd@mit.edu 16th March 2009, Page 4

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Our first customer…

Michael A M Davies mamd@mit.edu 16th March 2009, Page 5

15.905 Technology Strategy

So, we make money three ways…

Michael A M Davies mamd@mit.edu 16th March 2009, Page 6

15.905 Technology Strategy

Three key questions

•  Who are the most attractive potential partners to design and manufacture devices for Danger?

•  Who amongst the worlds' many mobile network operators, and where and when, should Danger be targeting to create mobile data services based on its platform?

•  How can Danger develop trust and collaborate effectively with prospective partners who are also in fierce competition with each other?

Michael A M Davies mamd@mit.edu 16th March 2009, Page 7

15.905 Technology Strategy

Complete end-to-end solution

Michael A M Davies mamd@mit.edu 16th March 2009, Page 8

15.905 Technology Strategy

Three key elements to the technical architecture

A suite of server-based infrastructure software hosted as a service for wireless operators

Enables operators to quickly and economically deploy new applications

Built to leverage the capabilities of next-generation data devices

Features include:

•  reporting, billing, customer care

•  content conversion/compression

•  wireless synchronization

•  content and app vending

•  carrier-grade reliability and scalability

Development platform features hiptop Operating System (PTOS)

Enables third-party app developers to use standard development tools

Complete set of APIs included

Integrated download management system to enable carriers to offer after-market premium services and content

Designs offered to carriers with a set of features and applications that can be further customized

Enables user customization including preferences and alerts

Apps currently included:

•  mobile phone

•  email (with attachments)

•  instant messaging

•  web browsing

•  calendar, address book, notes

•  snapshot gallery for photos

•  games

•  web portal

•  camera (very low resolution)

hiptop Service Delivery Engine hiptop Development Platform hiptop Device Designs

Michael A M Davies mamd@mit.edu 16th March 2009, Page 9

15.905 Technology Strategy

Sidekick II

•  Marketed through T-Mobile •  Manufactured by Sharp

•  Can be managed remotely by any web-enabled computer

•  Catalog with downloadable ringtones, games and apps

Michael A M Davies mamd@mit.edu 16th March 2009, Page 10

15.905 Technology Strategy

Targeted at youth demographic

•  Consumer positioning as 18-35 year-olds; device is “all about fun and getting more from life with spontaneous communications” –  “If you look at the enterprise

market, it’s clear that the consume market is several orders of magnitude larger.” - Danger’s CEO, Hank Nothhaft

•  Sidekick users send and receive 20-40 times more messages than the average user

•  1% of US mobile users generated 6% of total US messaging traffic in Q4 2004

•  Client-server technology enables superior user experience and efficient, optimized use of the packet networks

•  Requires less expensive hardware, so lower subsidies

•  “Over the Air” upgrades allow operators to offer compelling new apps to subscribers

Michael A M Davies mamd@mit.edu 16th March 2009, Page 11

15.905 Technology Strategy

Danger, Inc, in 2003

•  June - launches color T-Mobile Sidekick •  August - launches Fido hiptop with Microcell in Canada •  September - license agreement with Sun Microsystems

for Java •  November - launches with E-plus in Germany

Michael A M Davies mamd@mit.edu 16th March 2009, Page 12

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Danger, Inc. in 2004

•  May - launches with ONE in Austria •  May - launches with Starhub in Singapore •  July - $37 million Series D •  July - partnership with Sharp to develop, manufacture and

distribute hiptop devices •  August - launches hiptop™2 with T-Mobile as Sidekick II •  December - adds Jamaica

Michael A M Davies mamd@mit.edu 16th March 2009, Page 13

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Danger, Inc. in 2005

•  February - platform becomes Java® compatible •  May - launches hiptop™2 with KPN in The Netherlands •  June - launches Sidekick II with T-Mobile in Germany •  November - launches Sidekick II with T-Mobile in

United Kingdom

•  (and founders who have gone to Android, snapped up by Google – watch this space…)

Michael A M Davies mamd@mit.edu 16th March 2009, Page 14

15.905 Technology Strategy

Oh…and on 21 February… Paris Hilton

•  “Paris Hilton's address book, famously kept on a T-Mobile Sidekick, has been popping up all over the internet after someone managed to figure out her password. Files exposed to the world also include Paris' travel habits, airline and hotel preferences, along with her private notes.”

The Register

Michael A M Davies mamd@mit.edu 16th March 2009, Page 15

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Danger, Inc. in 2006

•  February - adds soccer content in Germany •  April - joins MSN Developer Program to be able to

deploy MSN Messenger •  June - launches T-Mobile Sidekick 3, developed with

Sharp •  October - launches with Telstra in Australia

Michael A M Davies mamd@mit.edu 16th March 2009, Page 16

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Michael A M Davies mamd@mit.edu 9 April 2008, Page 17

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2007 and 2008

•  Apple announces iPhone in partnership with Cingular •  Microsoft announces Windows Mobile 6 •  T-Mobile announces partnership with Nokia to bring

Series 60 to “mainstream consumer markets”

•  20 December 2007 files for IPO – highly dependent on T-Mobile –  revenues ~$56 million, losses ~$12 million

•  And in February 2008, Microsoft buys Danger for about $500 million

Michael A M Davies mamd@mit.edu 16th March 2009, Page 18

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What will Microsoft do with Danger, Inc.?

•  “… I won't spend too much time pondering how long it will be until Microsoft kills the Sidekick and its Java-based OS (as long as it takes to build a Windows-based version)…The interesting part is …Microsoft …has appointed Roz Ho to lead the Danger integration. Ho has spent the last few months in an unspecified "special projects" role under J Allard, Mr. Zune himself…[B]efore that, Ho was the …leader of [the] Mac Business Unit, which means there's probably no Microsoft executive more familiar with Apple. Connect the dots and they spell iPhone. So how will Microsoft go about it? My guess is they'll whip out some sort of Zune client software for the current iteration of Windows Mobile as a stopgap measure, while simultaneously building a completely new device that combines a consumer-oriented UI, mobile services, and an associated hardware reference design. They will probably brand it as a Microsoft product (like Zune and Xbox), instead of merely licensing the software (Windows Mobile) or software+reference design (the short-lived Portable Media Centers). Sidekick's manufacturing partners, Sharp and Motorola, might be involved. Timeline: probably not until 2009.”

Michael A M Davies mamd@mit.edu 16th March 2009, Page 19

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What did Steve Ballmer say?

•  “On Danger, Ballmer said that Microsoft was attracted to the way the Sidekick gets applications and data to its users as well as the consumer interface and appeal. However, he made clear that he believed those things could be brought over to the Windows Mobile operating system and still preserved.

‘The Danger acquisition is really about building up an application and service aspect on top of our Windows Mobile platform,’

he said.

‘Danger is really a service application experience and we want to make sure we get that in market on a great set of phones.’”

Michael A M Davies mamd@mit.edu 16th March 2009, Page 20