Kin demise bodes badly for Microsoft’s mobile future

As postmortems of the untimely death of Microsoft’s Kin mobile phones continue to be written, some observers have started wondering aloud whether Microsoft has any future at all in the mobile technology business.

The software giant has announced that Windows Phone 7, or WP7, will start appearing on mobile devices in the fall, but observers question whether it can be successful at a time when Research In Motion is planning a major update for BlackBerry, and Apple’s iPhone 4 and a raft of Android devices have had time to reach ever-larger audiences.

“Microsoft is in a tough spot with mobile,” said Matt Rosoff, an analyst at Directions on Microsoft. “They’ve let Apple get a three-year lead with iPhone, and there’s BlackBerry with the same approach for control of hardware, software and applications. At the other end of the spectrum you have Android on many devices and carriers.”

Jack Gold, an analyst at J.Gold Associates, believes that Microsoft’s decision last week to basically kill the Kin will be viewed by enterprise buyers of traditional Windows Mobile devices as further evidence that Microsoft’s efforts to gain traction in the mobile device business are in trouble.

“It’s looking bleak for Microsoft in the mobile OS space,” said Gold. “The longer they delay getting [WP7] to market, the more bleak it looks. Whatever they release has to be rock-solid out of the gate or people won’t give them a second chance.”

The Kin One and Kin Two devices, based on technology gained from Microsoft’s $500 million acquisition of Danger Inc. in 2008, were targeted at teenagers and young adults. But even though Kin buyers were not enterprise workers, IT managers interested in Windows Phone 7 devices will look closely at how Microsoft handled — or mishandled — the Kin effort, Gold said.

“Enterprises will look at this Kin decision and ask, ‘If Microsoft can’t get Kin right, why would I think they will get WP7 right?’ ” Gold said.

The most celebrated technology feature of the Kin was Studio, which allowed the storing of pictures and other multimedia in the cloud. It’s unlikely that the initial version of WP7, whose release to manufacturers is imminent for expected availability by the fall buying season, will include Studio, Rosoff said.

However, both Gold and Rosoff said Microsoft should incorporate Studio in any future WP7 release.

Gold suggested that WP7 “may not make it to market this year,” noting that the demise of Kin put the WP7 effort even further behind schedule.

Gold also called Studio the “best part of Kin” and suggested that Microsoft expand it into a cloud-based hub for storing multimedia across a workgroup or small organization, or among family members — as more of a competitor to Apple’s MobileMe service. “It needs to be positioned as more than a place to put photos,” he said.

Microsoft wouldn’t comment on the future of its mobile business in general or on the WP7 release plans in particular. The company would only repeat its statement from last week that it is combining the Kin team with the Windows Phone 7 team and focusing on the WP7 launch.

Microsoft noted that the Kin won’t be shipping in Europe as planned, and that the company will work with carrier Verizon Wireless in the U.S. to sell out the Kin stock.

The absence of instant messaging and a calendar, as well as an inability to download apps, were big disappointments for users. And Verizon’s price tag for Kin’s monthly services were the same as what it charged for top-selling smartphones such as the Droid Incredible — starting at $30 for a data plan and $40 for a voice plan — even though it lacked such features.

“It seemed like a hard sell, with customers hard-pressed to choose a phone with fewer features at the same monthly cost,” said Rosoff.

Verizon defended its monthly pricing today and noted that it is still selling the devices, charging $29.99 for the Kin One and $49.99 for Kin Two. That’s a 50 per cent reduction from the prices, after rebate, that it first offered in mid-April.

“We think [the Kin] was priced the way it needed to be,” a Verizon spokesman said in an interview. “We still sell it and support it.”

The Kins were due for a major software update, possibly adding instant messaging, prior to the decision to kill it, Rosoff said. Verizon is expected to support the phones with Microsoft through the life of each user’s contract. Verizon wouldn’t say how many were sold, but analyst estimates range from 1,000 to 10,000 — a tiny fraction of iPhones sales, which number in the millions.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld.


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