Microsoft Kin Death Raises Windows Phone 7 Questions

By Nicholas Kolakowski  |  Posted 2010-07-01

Microsoft Kin Death Raises Windows Phone 7 Questions

Microsoft is discontinuing its Kin phones, which evidently failed to gain traction with its target demographic: teenagers and young adults obsessed with social networking. As the news spread across the Web, analysts and pundits widely assumed the Kin's death had been hastened by the recent shakeup in Microsoft's Entertainment and Devices Division. 

"Microsoft has made the decision to focus on the Windows Phone 7 launch and will not ship Kin in Europe this fall as planned," reads a June 30 statement from Microsoft. "Additionally, we are integrating our Kin team with the Windows Phone 7 team, incorporating valuable ideas and technologies from Kin into future Windows Phone releases. We will continue to work with Verizon in the U.S. to sell current Kin phones."

Carried exclusively in the United States by Verizon, the Kin One and Kin Two, announced May 13, included hardware and applications tailored to deliver a constant stream of social-networking data to the user. In a likely harbinger of trouble, Verizon in recent days had slashed the price of the stubby Kin One from $49.99 to $29.99 with a two-year plan, and the more rectangular Kin Two from $99.99 to $49.99. While the devices allowed users to seamlessly upload their photos and data to the cloud, they also lacked games, Flash support, and the ability to download third-party applications.

Despite a massive advertising push, Kin sales may have proved anemic; one rumor drifting across the Web, which has its origins in a June 18 posting on Business Insider, is that Microsoft sold only 500 phones since their release.

According to one analyst, Kin's problems can be traced back to Danger Inc., creators of the Sidekick mobile platform, which Microsoft acquired in 2008. Long before the Kin's unveiling, rumors abounded that Microsoft and Danger were collaborating on two branded smartphones, collectively dubbed "Project Pink."

"The Kin was a mistake from day one," Rob Enderle, principal analyst of the Enderle Group, wrote in a July 1 e-mail to eWEEK. "The extra time they took to convert the Kin from the Sidekick platform to Windows CE made it about a year and a half late to market, and the merger likely added another year and a half. That's 1.5 to 3 years late depending on when you start the clock." Given how quickly the phone market evolves, that sort of lag could have proved deadly to Kin's fortunes.

Microsoft's quickness in killing the Kin, Enderle added, suggests that change might be underway in Redmond. "Typical Microsoft behavior is to deny there is a problem for several years and then quietly kill the product," he wrote. "This keeps them from trying as many things because it makes mistakes incredibly expensive. If they have learned, and so far this is just an exception, to find and correct problems more quickly, they may be able to take more chances."

Microsoft Kin Death Raises Windows Phone 7 Questions

=The Kin's Weak Points} 

Long before the Kin's ignoble bargain-bin finale, analysts suggested several weak points in the phones' marketing strategy. Prime among them: the cost of the monthly data plans. Calling plans that ranged from $39.99 for 450 minutes to $69.99 for unlimited time, paired with a monthly $29.99 for data, may have proven too expensive for both cost-conscious parents and teenagers making minimum wage at the local mall. In addition, there were questions about how well Microsoft would be able to integrate the Kin phones with its other services.

"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," Jack Gold, principal analyst of J. Gold Associates, wrote in an April 13 research note soon after the Kin phones' unveiling. "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?"

With regard to the last question, the answer was evidently: "Not much."

Microsoft's internal politics may have also hastened Kin's date with the reaper. In late May, the company's Entertainment and Devices Division underwent a massive shakeup, one that saw the quick departures of Robbie Bach, the unit's president, and J Allard, its senior vice president of Design and Development. In addition to Kin, the Division is also responsible for other consumer-centric products such as the Xbox franchise and the Zune media player.

In the wake of that shakeup, Microsoft CEO Steve Ballmer promoted Senior Vice President Andy Lees to run the company's Mobile Communications Business, and Senior Vice President Don Mattrick to handle the Interactive Entertainment Business. "Concurrent with Robbie's retirement, I am making several organization changes to ensure we have the right leaders in the right positions as we set ourselves up for the next big wave of products and services," Ballmer wrote in a memo at the time.

The shakeup also likely resulted in the death of its "Courier" tablet PC project. Although it never managed to exit the development lab, early video and photo leaks on tech blogs hinted at a device with two touch screens folded on a central hinge-like a traditional book-and capable of letting users write notes or draw longhand.

"It's in Microsoft's DNA to continually develop and incubate new technologies in order to foster productivity and creativity," Frank Shaw, Microsoft's corporate vice president of communications, wrote in an April 30 statement following rumors of Courier's demise. "The Courier project is an example of this type of effort and its technologies will be evaluated for use in future Microsoft offerings."

Note how that statement echoes the company's "incorporating valuable ideas and technologies from Kin into future Windows Phone releases" missive from June 30. At least from the outside, it seems that Microsoft is sweeping its decks clean in preparation for the launch of Windows Phone 7, a complete reboot of its smartphone operating-system franchise.

Microsoft Kin Death Raises Windows Phone 7 Questions

=Windows Phone 7: Hail Mary Pass?} 

Widely expected to launch on a variety of carriers before the end of 2010, Windows Phone 7 features a user interface markedly different from the rival Apple iPhone and Google Android platforms, which emphasize pages of standalone applications. In place of that model, Windows Phone 7 condenses Web content and applications into a set of subject-specific "Hubs," such as "Games" or "Office."

Microsoft has been feverishly pushing at both business-application and games developers to create content for the new platform. One developer reportedly told the Website in June that Microsoft had approached his colleagues about making their iPhone games compatible with Windows Phone 7, with the company allegedly willing to offer "substantial" amounts of money to make that happen. In addition, Microsoft pushed the platform as business-friendly at its recent TechEd conference.

"More than 90 [percent] of our target customers for Windows Phone use their smartphone for business purposes," Paul Bryan, a senior director of Windows Phone at Microsoft, wrote June 7 on the Windows Phone Blog, timed to the first day of TechEd, "and 61 percent use their phones equally or more for business than personal use. This is why we designed Windows Phone 7 to combine a smart new user interface with familiar tools such as PowerPoint, OneNote, Excel and SharePoint into a single integrated experience via the Office hub."

With Kin dead, Microsoft's attention now focuses solely on Windows Phone 7. As Enderle mentioned in his note to eWEEK, the Kin's sudden demise possibly re-emphasizes Microsoft's renewed do-or-die focus on the mobile space. "This could be an early indicator of a major change at Microsoft, or it could be just an exception," he wrote. "We'll hope it is an early indicator."

Or as Jack Gold wrote in a July 1 e-mail to eWEEK: "Microsoft was splitting its resources between two mobile platforms, a hard thing to do for any company." Although those disparate groups may now have been linked in common cause, "Windows Phone 7 has to be a big success if they want to stay in the mobile game. It's not clear it will be, but it is probably slipping out even further, hence the pulling in of all resources available."

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