Sharp To Take Over Hiptop Production
By Eric Lin, Sat Jul 24 00:15:00 GMT 2004

It was a good day for Danger. It announced that Sharp will be manufacturing a new Hiptop device. It also announced another round of venture funding worth $37 million.

It has long been rumored that Danger sought to license the Hiptop OS or device platform to a manufacturer, so the announcement comes as no surprise. However very few suspected Sharp to be Danger's first partner. Although Sharp doesn't have much experience with keyboards, it does have excellent screen, radio and Java implementations in its handset lineup. Sharp's technical expertise and strong brand name, as well as its significant manufacturing capabilities, are quite the coup for Danger, which has suffered from weakness in all these areas. Sharp will benefit with a strong platform from which to strengthen North American phone sales, which are practically non-existent for the Japanese company. The "yet-to-be unveiled" Hiptop is due out in Europe and North America before the Christmas shopping rush -- which begs the question what is to become of the Sidekick 2 Danger showed off at Cannes?

Signing a manufacturer with extensive manufacturing and design capabilities frees Danger to concentrate on the OS and server that are the heart of its business. It was rumored RIM was looking into this same strategy, especially after successfully licensing it software to every major handset manufacturer. However RIM continues to produce devices, and leaks that the next generation Blackberries will include Bluetooth indicate it has no intention of quitting any time soon.

Danger is in a unique position in the ongoing battle between OS makers, device manufacturers and carriers to "own" customers. It has a tighter grip on customers than almost any other software maker. Like Qualcomm does with BREW, Danger controls the entire software library for its devices, but it goes beyond software. No data gets onto or off of a Danger device without going through a Danger server - web pages, email, IMs as well as contacts and other PIM data.

Despite the fact that Danger owns its customers like no other company, it does not brand the experience. Instead that's up to the carrier, which can brand nearly every screen on the device as well as the device portal. Danger didn't brand its handsets either, instead using an ODM to manufacture them and allowing each carrier to brand them. By passing off handset design and production, Danger further removes itself from the physical side of the business, and allows manufacturers and carriers to maintain the traditional relationship that benefits them both in the US (where the carrier brand is stronger) and Europe (where the hardware brand rules).

So far adoption of the Hiptop has been slow, but many of the complaints steering away new subscribers have been hardware related. Sharp's manufacturing should be able to correct this issue. Danger has completely removed itself from the branding and hardware equation, and created a carrier-controlled Java interface, creating a platform similar that being pitched by carriers through the new OMTPA. If Danger can give the carriers as well as subscriber what they want, they are poised on the brink of success. The $37 million vote of confidence from investors seems to indicate that they agree.