Microsoft's Kin Smartphones Could Eclipse Windows Phone 7

Microsoft's Kin One and Kin Two smartphones could benefit from the rise in social networking, but the mobile devices' ultimate success also depends on details not announced during their April 12 rollout, such as carrier plans. One analyst estimates that if the Kin smartphones attract even a fraction of the demographic heavily into social networking services like Facebook, they have the potential to eclipse sales of Windows Phone 7, the upcoming smartphone operating system that Microsoft is counting on to regain market share from competition such as Google Android and the Apple iPhone OS.

Microsoft's upcoming Kin One and Kin Two smartphones, aimed at a younger demographic, could benefit from the rising popularity of social networking; moreover, the phones' success or failure could serve as a barometer for the fortunes of Windows Phone 7, the smartphone franchise that Microsoft plans on launching near the end of 2010.

The Kin One, with a sliding form factor reminiscent of the Palm Pre, features both a physical QWERTY keyboard and a touch screen, as well as a 5.0-megapixel camera with flash capable of shooting SD video. The Kin Two also has a sliding QWERTY keyboard and a touch screen, along with an 8.0-megapixel camera and stereo speakers. Robbie Bach, president of Microsoft's Entertainment & Devices Division, said during an April 12 presentation in San Francisco that the phones' target demographic was "the sharing generation" for whom "social life is their priority No. 1."

Microsoft may have found an appropriate approach. Several statistics companies, including Nielsen, have spent the past several quarters tracking the rise in social-networking usage. That increase has been affecting a wide variety of IT businesses in their approach to building software; during an April 8 presentation in New York, CEO Marc Benioff displayed a graph showing the number of social-networking users surpassing e-mail users, data that he said justified the creation of the Facebook-like Salesforce Chatter collaboration platform. That same logic is obviously influencing smartphone operating system design, as well.

Click here for a look at the Kin One and Kin Two.

Whatever the strategy, Microsoft evidently feels the need to embrace a completely new paradigm; the company occupied about 15.1 percent of the smartphone OS market during the three-month period ending in February 2009, according to data from research company ComScore, representing a four-point dip from the previous quarter. Research In Motion's BlackBerry franchise, meanwhile, held about 42.1 percent of the market, followed by Apple with 25.4 percent. Google held fourth place with 9 percent, although its share of the market has been rising rapidly in most surveys.

Microsoft is betting that its upcoming Windows Phone 7 will also help reverse this market trend. Windows Phone 7, in a departure from the operating system model of the Apple iPhone and Google Android, aggregates Web content and mobile applications into "Hubs" delineated by subject category, such as "People" or "Games." While Microsoft executives have mentioned on several occasions that Windows Phone 7 will roll out with a suitable massive marketing campaign, the Kin smartphones have a role to play in the company's mobile shift.

"I would argue that Kin may be the more important product of the two OS offerings," Jack Gold, principal analyst of J. Gold Associates, wrote in an April 13 research note. "Kin is a bigger gamble, whereby Microsoft is trying to define a new market niche. If it catches on, Kin could usher in a new class of 'Facebook in Your Pocket' devices, just like iPhone created a class of devices for Internet-centric users."

However, Gold added, the Kin line's success or failure is ultimately dependent on a wide variety of factors.

"How well will Microsoft and carrier partners (Verizon in the U.S., Vodafone in other parts of the world) promote the device and build a loyal and virally expanding user base?" Gold wrote. "Success will depend on how well Studio and Windows Live support integrate with the phone, and since only Microsoft can deploy a new service to the device, how well it does so is critical."

In addition, he wrote, "Success will also depend on what types of service plans are available, how they're priced and how good the service is (i.e., the AT&T/iPhone fiasco would be a killer for Kin). Finally, what specialized services will the carriers offer to try and garner some of the potential cloud revenue?"

The Kin smartphones lack Flash support for the browser. They also don't have a memory card slot, traditional calendar application, instant messaging-or games, unlike consumer devices such as the iPhone that include 15-minute time-wasters in their lineup of third-party applications.

Even so, "the potential win for Microsoft is huge if it can capture even a relatively small fraction of the hundreds of millions of social network users," Gold wrote. "In fact, it could dwarf the few tens of millions potential of its [Windows Phone 7] smartphone devices. With Kin, Microsoft gets to sell a lot of services in the cloud, and not just license the [operating system], as in [Windows Phone 7], so Kin is ultimately far more profitable than [Windows Phone 7]."