The Danger-ous IPO?

Danger, the company that builds software for the “Sidekick” and other mobile devices, has filed an initial public offering after years waiting hungrily for three years to make such a move.

However, the Palo Alto, Calif., company lives under a big shadow emanating from Mountain View’s Google. That’s where one of Danger’s co-founders, Andy Rubin, is now working on a much bigger vision than Danger’s: A cross-platform mobile operating system called Android that lets you access your data from any phone or device (see our coverage ).
Danger plans to raise up to $100 million of stock.

Like RIM’s Blackberry, Danger’s device is popular because it offers a converged client-server application for carriers like T-Mobile and Sprint, giving consumers an experience few others have matched. While RIM lets the professional, email-focused crowd sync emails with their corporate servers, Danger has hit it off with the young, IM-focused crowd. RIM and Danger have this in common: If you break or lose your device, the data you carried on it is backed up on the wireless network, and its there to access again with your replacement device.

Danger did open up its platform for other developers to produce applications for it, so it was early to join the trend toward open platforms popular today. However, Danger’s weakness is that it is closed in other ways. It limits the range of existing popular software and applications you can access, and you can only access them with devices Danger chooses. It is popular among young people who haven’t invested years into popular programs such as Outlook or Exchange. While Google’s Android is a vision that has yet to be realized, and may not get anywhere, it represents a more radically open vision. Then there’s the Palm and the iPhone, devices that can be synced with your PC, and they are devices on platforms that are moving toward the wireless syncing model offered by Danger and RIM — especially in the case of the iPhone. Is it only a matter of time before Danger gets squeezed by such competition?

A year ago, the company raised $12.3 million, much of that coming from Sharp. (Sharp’s device using Danger is called the “Hiptop” while T-Mobile’s is called the “Sidekick.”

Danger was previously backed by $134 million, coming from players like Redpoint Ventures, Mobius VC and T-Mobile Venture Fund, Adams Street Partners, Deutsche Telekom, Diamondhead Ventures, inOvate Communications Group, Institutional Venture Partners, Meritech Capital Partners, Orange Ventures, Softbank Capital Partners and VSP Capital.

The company is still not profitable. It lost a net $12.4 million for the year ending Sept. 30, compared to a loss of $6.6 million the previous year. That’s what concerns us. With so much funding, and so much time to have worked on its project, the company should be in the black, and the IPO comes when other aggressive players aren’t standing still.