Attack of the killer e-mail device

May 15, 2001

IN A SILICON Valley clouded by dismay and despondency, Palo Alto-based Danger could prove to be a ray of sunshine. Founded last year by president and CEO Andy Rubin, chief technology officer Joe Britt, and senior vice president of hardware and operations Matt Hershenson, the company is building a wireless email device that the trio hopes will displace Research In Motion’s popular Blackberry device. Not shy about admitting that Blackberry was his inspiration, Rubin says, “RIM did it right, and we are emulating it.”

But Danger isn’t the only company trying to build a Blackberry-type email device. Others like Good Technology of Redwood City, Calif., and Motorola are also building gizmos that let users send and receive wireless email.

The RIM-envy is justified, because investment bank Morgan Stanley Dean Witter has forecasted that in five years the U.S. interactive mobile wireless industry will yield $15 billion in annual revenue and in ten years that figure will jump to $60 billion. International Data Corporation, a market research firm, expects that shipments of smart handheld devices (including Blackberry-type devices and personal digital assistants) will grow from 12.9 million units in 2000 to more than 63.4 million units by 2004.

RIM’s Blackberry has a strong presence in the corporate market. Danger is targeting the consumer market — a wise move, despite lower margins, as demand there is much higher. For instance, Motorola has sold more than a million of its Talkabout radio devices, which are favored by glitterati like Los Angeles Laker Shaquille O’Neal, rapper Jay-Z, and MTV heartthrob Carson Daly. “I don’t think that the Blackberry will appeal to consumers, as consumers want more than e-mail,” says Tim Scannell, an analyst with the research firm Mobile Insights. “Consumers want wireless Web, instant messaging and e-mail, and they don’t want to spend $500 for a device.”

Danger hopes to price its device somewhere between $150 and $200, making it much cheaper than the $400-plus Blackberry. Britt believes that the company’s products, expected to ship this fall, will be ideal for wireless carriers building next-generation networks that can support data rates higher than the current 19.2 Kbps.

A prototype made available to Red Herring included a calendar, an address book, a memo pad and Web browsing software. The cigarette pack-size device, which supports electronic games and applications like stock tracking, also has a small keyboard.

“With our device, you can actually see any HTML-based Web page,” boasts Britt, who previously developed operating systems at 3DO, Apple, Catapult and WebTV. The process involves rendering the pages on Danger’s server, Britt says. The company’s server software does the heavy lifting; the device locally caches only small portions of data — for example, an address book.

“And the fun part is, if you lose your device, you can buy a new device and restore everything,” says Rubin.

For that alone, Danger will be worth buying.