When Paris Hilton’s Sidekick-branded cell phone got hacked last year, Danger, the company behind the popular devices, got its fair share of attention, though not exactly the kind it was expecting.

The company hopes to raise its profile in a more positive way next week when the much-anticipated Sidekick 3 goes on sale, the company said on Tuesday.

T-Mobile will start selling the device to its customers on June 28 and to the general public on July 10. The device is priced at $299 with a two-year contract, $349 with a one-year contract, and $399 with a prepaid service plan. The service pricing will also include the cost of any of T-Mobile’s voice plans, plus an additional $20 per month for an unlimited data plan.

Palo Alto, California-based Danger also sells its communications service under the brand Hiptop through other wireless carriers, but the Sidekick brand sold through T-Mobile makes up much of the company’s sales. Danger works with manufacturers like Sharp that make the device.

Filling a Niche

Mobile email and IM lovers bought up the Sidekick and Sidekick 2 in droves, and the devices filled a niche for young data-hungry users who wanted to stay connected. Marketing plans helped by giving the Sidekick to a slew of young celebrities like Paris Hilton who endorsed the product.

Companies like Research In Motion, Good Technologies, Visto, Nokia, and even Microsoft, have been battling each other over business-targeted email customers, while young consumers have been less sought after.

“The whole concept of the Sidekick 3 was to stay true to form and stick with messaging,” said Danger spokesperson Matthew Flegal. The target audience is once again the 18- to 34-year-old, young adult, mass-market consumer, said Mr. Flegal.

The device will also include significant upgrades. The Sidekick III will have enhanced multimedia uses, including an MP3 player and more photo functions. In addition the device gets a new track-ball scroller, a higher-speed wireless connection using EDGE broadband, and integrated Bluetooth.

Analyst John Jackson with Yankee Group said, “There’s every reason to expect that the Sidekick 3 will be as popular as the Sidekick 2.”

Dangerous Business?

Danger does not disclose its sales or number of devices sold, but in an interview with Red Herring last November, CEO Hank Nothhaft said the company was not yet profitable, but expects to be so by the end of 2006.

Over the past few years the company raised $110 million in venture funding from companies like Mobius Venture Capital, Redpoint Ventures, T-Ventures, Softbank Capital, Motorola Ventures, and Orange Ventures, among others.

Mr. Jackson said given the price at which the company is selling the device, “it is not likely the margins on their hardware are particularly high.”

Likely the company hopes strong sales of the newest device will boost the company into the black.

And as far as added security goes? Mr. Nothhaft said in November that the company “spends a lot of time making the system secure.”

That’s good news for celebrities who no doubt already have their Sidekick 3’s in tow. At a launch party in Los Angeles on Tuesday, there’ll likely be enough incriminating photos on the devices to entice any interested hacker.

Contact the writer: KFehrenbacher@RedHerring.com