Kin Phones, Factory Conditions, Outsourcing Dominated Microsoft Week

Microsoft's week was first highlighted by the unveiling of its Kin One and Kin Two phones, aimed at a younger and social-networking-friendly demographic, before moving on to focus on more international issues. After a report on allegedly substandard conditions at the KYE factory in China, which produces a number of Microsoft products, Redmond shifted into damage-control mode by promising to send an audit team to investigate. Microsoft also announced that it would outsource its internal IT services to India-based Infosys.

Microsoft's week started off with the unveiling of its Kin One and Kin Two phones, aimed at a younger and social-networking-happy demographic, at a high-profile stage event in San Francisco on April 12. Journalists in New York City followed along via live video feed, which showed Robbie Bach, president of Microsoft's Entertainment & Devices Division, stating that the devices' target was "the sharing generation" for whom "social life is their priority No. 1."

Formerly known to the media as the oft-rumored "Project Pink," the Kin One and Kin Two include built-in camera modules capable of capturing video, as well as an operating system modified to facilitate the posting of messages and media to the user's collection of friends and -friends.'

Click here for more information on the Kin One and Kin Two.

The smaller Kin One, with a form-factor reminiscent of the Palm Pre, includes a slider QWERTY keyboard for "one-handed texting," according to the Website, in addition to a touch screen, a mono speaker tuned for speakerphone and 4GB of memory. The larger Kin Two is more rectangular, in many ways a cousin to the T-Mobile Sidekick, and features a sliding QWERTY keyboard, stereo speakers and 8GB of memory. Both the Kin One and Kin Two include a media player powered by Zune, and will be exclusively carried in the United States by Verizon.

"As we were working on Windows Phone 7, we said we had an opportunity to pursue a different possible audience," Bach said, adding that the Kin was "a deeply social phone that will give [that demographic] what they want."

According to research firm comScore, Microsoft occupied 15.1 percent of the smartphone OS market in the three-month period ending in February 2009, down from 19.1 percent the quarter before. Contrast that to Research In Motion, which held 42.1 percent of the market, followed by Apple with 25.4 percent. Google Android holds around 9 percent of the market, but analysts expect that share to grow rapidly as more manufacturers install the operating system onto future devices.

While Windows Phone 7, due for release near the end of 2010, is widely expected to be Microsoft's primary attempt to regain market share, the question remains how the Kin One and Kin Two fit into that larger picture despite their focus on a very specific audience segment.

"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 the iPhone created a class of devices for Internet-centric users."

However, Gold continued, substantial questions remain about the Kin phones, which are scheduled to make their debut sometime in May.

"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."

The rest of Microsoft's week had a more international focus. Microsoft pledged to send an investigative team to the KYE factory in Dongguan City, China, after an April 13 report by the nonprofit National Labor Committee suggested that the facility imposes substandard living and working conditions on many of its employees.

"Over the past three years, unprecedented photographs of exhausted teenage workers, toiling and slumping asleep on their assembly line during break time, have been smuggled out of the KYE factory," reads the introduction to the report by the National Labor Committee, which is dedicated to drawing attention to labor and human rights abuses. "Workers are paid 65 cents an hour, which falls to a take-home wage of 52 cents after deductions for factory food."

In addition, according to the report, workers are prevented from talking or listening to music during their shift, while also being forced to endure restricted freedom of movement and harassment from security guards. The factory also produces products for Hewlett-Packard, Acer and Best Buy, among other companies.

"Microsoft is committed to the fair treatment and safety of workers employed by our vendors," a Microsoft spokesperson wrote in an e-mail to eWEEK April 14. "Microsoft has invested heavily in a vendor accountability program and robust independent third-party auditing program to ensure conformance with the Microsoft Vendor Code of Conduct."

However, the report suggests that KYE factory management has taken steps in the past to cover labor violations. Microsoft representatives who visited the factory, it stated, were "always...accompanied by mid- and high-level managers. On these walk-throughs, U.S. company representatives hardly ever speak to the workers." Ahead of corporate audits, allegedly, workers are coached about what to say with regard to working conditions, dorms, meals and shift length.

Other tech companies have experienced similar tensions with their manufacturing vendors. In a 2009 audit, for example, Apple found 17 violations of its Code of Conduct in a review of 102 facilities.

Microsoft also embraced outsourcing this week, with its internal IT services now being handled by India-based Infosys, which plans on providing the company with help desk, desk-side services, and infrastructure and application support through multiple centers worldwide.

"Infosys demonstrated that it understood our transformational goals by introducing a flexible and innovative end-to-end approach to manage our support infrastructure," Jim BuBois, general manager of Service Management for Microsoft, wrote in an e-mailed statement to eWEEK on April 13. "The fully integrated solution developed by Infosys, combined with process compliance, a robust tool platform and the creation of a Service Excellence Office will help us enhance how we deliver end-user computing services to our internal employees and partners while leveraging the innovation and investments we make in developing new technologies."

In an April 13 statement, Infosys also suggested that the knowledge of Microsoft technologies learned in the course of the agreement would allow it to service other customers using those same technologies. One piece of Microsoft software that Infosys may very well not be servicing, though, is Windows Vista RTM: Microsoft killed support for that original and patch-free version of its older operating system on April 13, forcing anyone still on Vista who wants support to update their copies with Service Packs.