Yep, the HipTop is finally here (sort of), but forget your gadget frenzy for a second and consider the business model

August 6, 2002

3 Min Read
Biff! Bang! Pow! It's Danger!

Secretive wireless startup Danger Inc. (KA-POW!!!) has finally launched its HipTop voice/data communications device, and, yes, it is rather funky (see Danger on Your Hip). However, cool as the so-called "convergence device" is, what the rest of the industry should be watching is whether Danger (BIFF!!!) can make a go of its innovative, carrier-focused business model.

Danger (BAMMO!!!) is taking a different path from most other handheld manufacturers with its offering. The company isn't making the devices itself, it isn't branding them with its marquee, and it won't be developing a lot of applications to run on the device, although it will host services for the carriers. "We're sort of like an ASP," Andy Rubin, Danger (BONK!!!) CEO told UnstrungEssentially, the company is handing over the reins of power to the wireless operators, allowing them to tailor its GSM/GPRS device to their own requirements, in a way that Microsoft Corp. (Nasdaq: MSFT) or Palm Inc. (Nasdaq: PALM) never have.

Danger (THWACK!!!) plans to make its money through revenue-sharing agreements with the carriers, according to IDC analyst, Kevin Burden.

"They have what could be a very successful business model," says Burden. "But the key to its success is carrier partnerships." The number of partners the start-up gathers will indicate the success or failure of the venture.

Danger (KA-BLOOEY!!!) has announced a partnership with T-Mobile U.S. (formerly Voicestream). The carrier is planning to launch its first Danger (BOOM!!!) device, rebranded as the "Sidekick", in the fall of this year.

Burden says it is "likely" that Danger (WHOOF!!!) will have announced two or three partners by the time the Sidekick hits the market.

Of course, T-Mobile is the worldwide mobile arm of Deutsche Telekom AG (NYSE: DT). So, success in the U.S. market for Danger (CRUNCH!!!) could open the way for the company in the GSM/GPRS heartland of the European market.

Price is certainly an attractive point in Danger's (ZOTS!!!) favor. Everything seems to suggest that the carriers will offer the HipTop at a price-point of around $200. If it can do the things its designers say it can -- Web-browsing, email, voice calls -- even halfway decently, the device is going to break down the $500+ price barrier for smartphones and wireless PDAs.

"It’s the first always-on device at a price point that consumers can afford," crows Rubin.

"It's kinda like Dell entering the PDA market with a $299 Pocket PC," Burden says.

However, as Rubin admits, there are still things that Danger (SMACK!!!) will have to do to help the carriers make its device a success. The company has to encourage developers to work with the HipTop for starters.

The devices has its own virtual machine (VM), and developers can create lightweight services for it using tools like IBM Corp.'s (NYSE: IBM) Just In Time software.

However, the company hasn't yet finished the Java version of its software. Should Danger (SCRUNCH!!!) have held on for Java?

"It’s a good point," says Burden. "Carriers are really developing most of their services based on Java."

However, after two years of hype, scrutiny, and speculation, perhaps Danger (bababadalgharaghtakamminarronnkonnbronntonnerronntuonnthunntrovarrhoun
awnskawntoohoohoordenenthurnuk!!!) was just happy to get its HipTop out the door.

— Dan Jones, Senior Editor, Unstrung

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