Hiptop on the Horizon
By Jeff Goldman, Fri Aug 15 00:00:00 GMT 2003
Just when you thought multifunction devices were only targeting the enterprise, here comes Danger.
On August 6th, the California-based
startup Danger announced a range of partnerships that will lead to the
release of its wireless device, the Hiptop, within the next few months.
After twice pushing the date back, the company now says the device will
first be released on the T-Mobile network in the U.S. by the end of the
year, followed by Orange in Europe.
Sounds like any other
product announcement, right?
But the Hiptop isn’t just any
wireless gadget. It offers enterprise-level functionality at a consumer
price point, expected to be around $200. It’s a thin client device
which leaves most of the processing and data storage to back end
servers. And the business model is unique: Danger profits only by
providing services and infrastructure for the device, not by selling the
The Hiptop is designed to help carriers show off
their new high-speed networks to the best possible advantage, providing
consumers with phone functionality, a web browser, messaging, games, a
camera, and an organizer, all on one device. A Flash demo on the company’s web
site vividly demonstrates the Hiptop’s capabilities.
targeted at 18 to 34 year olds, the device is built to be fun to use.
When closed, the monochrome screen remains visible: rotate the screen in
a half-circle, and you reveal a full keyboard with a directional pad for
on-screen navigation—and, of course, for gaming. To the right side of
the screen, a scroll wheel (which glows in different colors) makes
Despite the unique aspects of the device
itself, Danger isn’t in the device business: the Hiptop’s reference
design will be licensed royalty-free to hardware manufacturers. Danger’s
business model then involves either licensing the device’s back end
solution to carriers, or hosting the infrastructure on the carriers’
John Arledge, Danger’s Vice President of
Business Development, says the idea is to give carriers a seamless,
end-to-end solution that puts them in complete control of the customer
relationship. “Danger is the only company offering a complete solution
that incorporates hardware, client software, and a back end service,” he
The carrier can either license the back end solution from
Danger, or Danger can host it as a managed service. This allows a
carrier to reduce their risk by starting with the managed service, then
transitioning to the license if the offering is successful. When the
Hiptop is first offered in the U.S., Danger will be hosting the service
on behalf of T-Mobile.
Andy Rubin, Danger’s President and CEO,
explains that the company’s business model provides wireless carriers
with some significant advantages. First, because the device is so
cheap, carriers won’t have to subsidize it when selling it to their
customers. As a result, their risk in taking on new customers is
reduced, and they can start realizing a profit immediately.
importantly, Rubin adds, the Hiptop should greatly reduce churn. Because
the device is a thin client, all of a customer’s data—including calendar
and contacts—is stored on the back end server, not on the device itself.
The carrier, not the customer, controls the data. “Having the back end
manage your data, and not being able to take it with you when you turn
off, is a good feature for carriers,” he said.
because the carrier can resell Hiptop applications to their customers,
Rubin likens the Hiptop to a Sony PlayStation. People who buy games for
a PlayStation are less likely to switch, say, to a Nintendo GameCube.
“It’s a platform,” he said. “When you vend out applications on top of
that platform, that’s a personal investment for the end user. You can’t
take those with you if you churn off.”
This arrangement also
means that carriers can customize the device in a number of ways. Each
carrier can differentiate its offering and target specific market
segments by controlling the suite of applications it makes available to
its customers. The device itself can also be fully rebranded—in
T-Mobile’s case, the Hiptop will become the T-Mobile
The fact that the customer’s personal data and
applications are stored on the server does also benefit the consumer.
Rather than requiring the user to sync the device to a PC on a regular
basis, the Hiptop automatically syncs wirelessly with the back end
server. It can also offer seamless updates to the applications on the
device without involving the user at all.
Rubin points out, you can lose your device, and you won’t lose any data.
“Because every user-generated piece of data is stored and archived on
the back end, you can lose it, or it can get stolen or broken, and your
data is safe,” he said. “All you have to do is re-provision a new
device, and your data comes back automatically.”
because all data is manipulated by the server before it’s sent to the
device, network bandwidth is used much more efficiently. “Next to a
device that doesn’t have a service on the back end, you’ll notice it
being about four times faster on download speeds, even though they’re
using the same technology and the same network,” Rubin said.
Arledge points out that the pricing, of course, provides another great
benefit. “We’re targeting a much broader audience, at a much lower
price point, with applications that are tailored for them: instant
messaging, email, web browsing, games, camera, all the things that have
taken off so well on, say, the DoCoMo service in Japan, but have not
been addressed in the States or in Europe,” he said.
Niemi, Danger’s Vice President of Marketing, explains that aspects of
the device such as its monochrome screen are a result of the company’s
concerns about pricing. “We’re targeting a younger generation: price
point is a key consideration,” she said. “We’ve designed it so it will
sell for unprecedented low prices, and color would drive that price up.
It’s all a prioritization game.”
At less than half the price of
the Handspring Treo or the RIM BlackBerry, the Hiptop offers consumers a
lot of functionality—but Yankee Group analyst Sarah Kim points out that
the price still may not be low enough for many people. “$200 is still
a high-priced phone,” she said. “I paid $35 for my phone. They still
have the challenge of price—there’s still that sticker
And Kim is also concerned about the viability of a
monochrome device targeting an entertainment-focused market. “I can’t
emphasize enough how important it is to deliver rich functions on a
function-rich device,” she said. “If you’re the kind that’s going to
use data, you’ve probably shopped around—and once you’ve played any
popular game in color, you can’t go back to black and
A Tough Audience
a result, it’s reasonable to expect that future models will offer color
screens, MP3 players, and other changes. Mike Dolbec is a General
Partner with Orange Ventures, which invested in Danger: he suggests that
upgrades will come easily. “Because the platform’s more open and more
programmable than a regular phone, Danger is well positioned to improve
the hardware, and to improve the services as well,” he said.
fact, the Hiptop is clearly built for flexibility. Not only does the
thin-client design enable carriers to upgrade or fine-tune software
easily from the back end, but the hardware can be adjusted as well. The
screen is designed to be replaceable by the user if damaged, which could
also allow users to replace a monochrome screen with a color one in the
Giga Information Group analyst Ken Smiley suggests that
Danger’s prospects rest on its ability to find an audience in an
increasingly crowded market. Palm offers the best organizer and the
RIM BlackBerry has the market cornered for wireless email, he says: in
the same way, Danger will have to find its own niche.
client access to a mobile device that’s centered around consumer
activity, Danger may have a very attractive device for that audience,”
Smiley said. “It just remains to be seen whether or not that audience
is really there, and whether or not they’re willing to invest a little
bit more and sign up for some of these services.”
Rubin contends that, with both companies targeting the younger
demographic, Danger’s recently-announced partnership with T-Mobile is
an ideal match. With all its innovations, he says, the Hiptop heralds
a completely different way of looking at mobile data usage. “We’re
really entering a new era in terms of always-on data being available to
the mass market,” he said.
Goldman is a freelance writer covering a wide range of
topics for a number of online journals. He currently writes regular
articles for Internet.com's ISP-Planet. Brought up in Belgium,
Jeff spent the last decade in New York, Chicago and London; he now lives
in Los Angeles.