In the midst of the Yahoo Microsoft battle, the acquisition of Danger by Microsoft has taken a back seat. However this particular purchase is the new face of Microsoft even more so than Yahoo that will maintain a degree of automony.

Danger is a manufacturer of handsets and the operating system within. It also provides the backend services to support the product including email and IM servers.

These devices feature an interface many find intuitive, as well as some innovative hardware designs. But Danger also maintains a relationship with its customers – all mail and messaging is routed through centralised servers. Even web browsing is done through Danger’s proxies which optimise the content to suit the device – not to mention having the potential to control which sites the user is allowed to visit.

The introduction of the iPhone has forced Microsoft (although they would not admit it) to rethink it’s Windows Mobile strategy. Just like the Playsforsure platform has failed in the portable music device market, Windows Mobile has failed in smartphone market.

The premise behind the Windows Mobile platform (and Playsforsure) was that if you create a common OS among many manufacturers then you can control the customers. But what worked for Windows PC has failed for portable devices. The customer value the experience far more than on the Windows PC. Itunes and iPhone have proved that ease of use, consistency and reliably are far more important on your phone/music player.

This means that Microsoft has to make an about face with it’s mobile platform and here is where Danger comes in. Danger does understand that the user experience is key to their (albeit small) success but in order to move to the next level they need a serious backer such as Microsoft. Microsoft understands that Windows Mobile is dead in the water unless they can get closer to the customer, something that is not possible selling OSes to manufacturers. The closed managed user experience (eg iTunes, Blackberry) is what rules today, broad OS platforms for OSes are dead in the water (and yes that means Android too).

What Danger means to Microsoft is that Microsoft now understands that the business of Windows (OS) does not immediately translate into success in other markets. This notion that was prevalent in the late 20th century is wrong and the market has moved on. What this means to Danger is that it the Sidekick will morph into  a Windows Mobile device and it’s backend business will be subsumed into Windows Live environment.

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