VentureBeat

Microsoft Corp has agreed to acquire Danger, a Silicon Valley company that makes the software for the Sidekick and other mobile devices, for an undisclosed amount.

Danger has worked away for ten years on its device software, and recently filed for an IPO, which we termed as risky (see our piece The Danger-ous IPO), because Danger has not been as open as trends would suggest it should be, and it’s difficult to see how it could really thrive on its own. It is still losing money. The IPO route has become even more risky, given the downturn in the market, and also because household budgets (upon which Danger relies) might continue to tighten.

The acquisition is somewhat surprising because because Danger has operated a platform independent of Microsoft’s Windows Mobile. However, Microsoft said that Danger’s youthful audience and popular entertainment offerings make it attractive. Microsoft is also feeling pressure from the iPhone’s raging success and from Google’s emerging Android project.

Danger’s software offers HTML Web browsing, instant messaging, games, multimedia, social networking, Web e-mail and personal information management applications. Microsoft said wants to combine these services with Microsoft’s technologies, “including MSN, Xbox, Zune, Windows Live and Windows Mobile,” but it was vague about exactly how it plans to do so.

From Microsoft’s statement:

“The addition of Danger serves as a perfect complement to our existing software and services, and also strengthens our dedication to improving mobile experiences centered around individuals and what they like.”

The Palo Alto, Calif.-based company provides services that allow people to keep in touch, stay organized and keep informed while on the go through real-time mobile messaging, social networking services and other applications ― all blended together on a single phone that is intuitive and customizable.

“Danger continues to provide an effortless and fun mobile experience for consumers,” said Henry R. Nothhaft, chairman and CEO of Danger Inc. “Now by combining our uncompromised application software and powerful back-end service with Microsoft, we can expand our innovative service offerings even further and take mobility to a new level.”

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 mobile email company, Visto, has become one of the most controversial companies in Silicon Valley.

The Redwood City company has reportedly raised another $35 million in venture backing led by new investor Altitude Capital Partners, adding to the whopping $350 million the company has already raised. It is in the red, after ten years, and hasn’t announced a major customer in several months. Its penchant to file lawsuits is also worrying, and we’ve said before that is a reason why bias has crept into our reporting about this company.

Valley gossip site, Valleywag, says the company is on the rocks, but has no facts to back it up. PE Hub’s Dan Primack says the $35 million in cash, raised in December, would seem to contradict that, however there is no one on the record explaining the terms of that cash — and it is somewhat odd it wasn’t announced. Moreover, the company has a large cash burn rate, as Dan points out, caused by service contracts it pledged to.

Now we’re hearing its investors are spreading word that a 2007 acquisition is better than 50-50 odds. Yet we’re skeptical too, given that the company had said it planned to go public last year — and nothing happened (indeed, read that previous link for notes about the company’s questionable marketing). Indeed, with its huge cash burn, it may have to be sold.

Has this company hit the wall? We’ve contacted the company, and will report back if we hear anything.

Investors include Allegis Capital, Blueprint Ventures, Draper Fisher Jurvetson, ePlanet Ventures, GKM Ventures, Meritech Capital Partners, Oak Investment Partners and Rustic Canyon Partners.