At Hiptop debut, Danger rolls up sleeves

The start-up's highly anticipated inaugural product may have flown out the door at its unveiling, but the company says it is set for the challenges ahead.

Richard Shim Staff Writer, CNET News.com
Richard Shim
writes about gadgets big and small.
Richard Shim
3 min read
PALO ALTO, Calif.--Even as Danger employees celebrated the launch of the start-up's highly anticipated inaugural product at company headquarters Tuesday, there was a clear sense that there's more work to be done.

Earlier in the day, Danger partner T-Mobile, a wireless carrier, announced the nationwide availability of the start-up's signature Hiptop device. The wallet-size combo gadget lets users browse the Web, send and receive e-mail and instant messages and make voice phone calls.

While other devices perform some of these functions, the Hiptop has generated a healthy buzz because it's the first to do them all for such a low price. T-Mobile is selling a branded version of the device, the Sidekick, for $199 with service activation.

A nearby T-Mobile store opened an hour earlier than usual and sold out of the 35 devices it had in stock within minutes. But with each store receiving only a handful of the devices, it will take some time to see if the appeal goes beyond gadget hounds. Danger is aiming to sell hundreds of thousands of the devices, largely to teens and young professionals.

"This is certainly a milestone," said Danger Senior Vice President Matt Hershenson, as a jazz band played and staffers munched Krispy Kreme donuts. "But it's not an endpoint." Hershenson, who started the company with Chief Technology Officer Joe Britt and CEO Andy Rubin in January 2000, acknowledged upcoming challenges, such as signing up additional carriers and developing follow-on devices.

Danger, which has less than 100 employees, has been able to stay small because its partners take on all the responsibility for manufacturing and marketing the Hiptop. The appeal for the carriers is that Danger's device is cheap to make, letting them offer it to consumers for less than $200, a price-point analysts say is crucial for mass-market acceptance. Danger, which makes nothing on the device, grabs a slice of the carrier's revenue from monthly fees. T-Mobile has priced the service that goes with the gadget at $40 a month, with a modest amount of cell phone minutes and unlimited Web access and e-mail and messaging time.

Although Danger avoids the expense of having to build a brand and carry inventory, that also means key decisions are out of its hands. Carriers determine, for example, how many devices to build and how prominently they'll be featured in stores and advertisements.

Hershenson acknowledges that, but says there's some give and take.

"We work closely with the carrier to influence...how the product is marketed, and they have some voice in product development," Hershenson said.

Shooting for the masses
While other companies, such as Research In Motion, focus on corporate users, Danger is taking aim at the large, but price-conscious and fickle, consumer market.

Hershenson said the company has a lot of opportunity, particularly if it can develop a product people take to right away. The device was late to market, in part, because the founders wanted to make sure they were releasing a perfect product, according to Saeed Amidi, an early investor in Danger and a general partner at Palo Alto-based investment group Amidzad.

"We were pleased that it came out before Christmas," Amidi said.

So were the first customers, who began lining up at 7:30 a.m. Tuesday in front of the nearby T-Mobile store. Among those that managed to get their hands on the device was Rebecca Chin, whose husband is Danger co-founder Joe Britt's optometrist. Her son, Daniel Fukuba, had already gotten a chance to see the device when Britt gave him a two-hour tour of Danger's headquarters.

"My son has been asking for one every day for the last three months," Chin said.

Daniel got his wish, narrowly. His mother, who drove 50 minutes from La Honda, Calif., got stuck in traffic but arrived at 9:05 a.m., snagging the last of the 35 devices. Asked what the response would have been had she come home empty-handed, Chin said, "I don't even want to think about it."

At first glance, software developer Leigh Klotz appeared to be one of the many people who arrived too late to get a device. Amid a sea of the gadgets, Klotz was tapping away at an older Motorola two-way pager.

Actually, Klotz was the second person to buy a device Tuesday, but he whipped out his Motorola when he got impatient waiting for T-Mobile to activate his service.

"It's been 10 minutes," said Klotz.