Microsoft’s Silicon Valley shopping spree

By Michal Lev-Ram

Microsoft’s Silicon Valley shopping spree continues with its purchase Monday of Danger, a Palo-Alto based company that makes the technology behind the youth-centric Sidekick phone, popularized by Paris Hilton and other celebrities.

Like its bid to buy Yahoo (YHOO) — which turned down the tech giant’s $44.6 billion buyout offer Monday — acquiring Danger is yet another move to compete against Google (GOOG), which is making a big push in the mobile industry with its Android operating system for cell phones. Ironically, Danger was founded by Andy Rubin, who went on to launch a little startup called Android, which was later snapped up by Google. Rubin now heads up the search giant’s mobile division.

Robbie Bach, president of Microsoft’s (MSFT) entertainment and devices division, announced the deal for Danger at the Mobile World Congress in Barcelona on Monday. Financial terms of the acquisition were not disclosed. “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,” Bach said in a statement.

In addition to making the technology behind T-Mobile’s (DT) Sidekick phones, Danger develops mobile services, including a MySpace application for cell phones. Unlike Microsoft, Danger has a young, cult-like following and Redmond hopes the acquisition can help extend its reach in the consumer market.

Microsoft says it plans to combine Danger’s services with its consumer-focused products, including MSN, Xbox, Zune, Windows Live and Windows Mobile, the company’s own operating system for cell phones. But it’s not clear exactly how Danger will fit into this vision, and whether the smaller company’s platform, which competes with Windows Mobile, will disappear.

“It will be really interesting to see how Microsoft integrates the technology, business model, and overall device cachet to a culture more at home to selling to enterprise CIOs than it is to selling rock stars,” Jupiter Resarch analyst Michael Gartenberg wrote in his blog.