What Does Kin's Death Really Mean for Microsoft?

As post-mortems 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 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 at targeted 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 in Kin was the Studio feature that 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 an expected release 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 work group or small organization, as well as a family -- 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 said 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.

Absence of instant messaging and a calendar, as well as an inability to download apps, were big disappointments for users. Even lacking such features, Verizon's price tag for Kin's monthly services were the same as it charged for top selling smartphones such as the Droid Incredible -- $30 for a minumum data plan and $40 for a minimum voice plan.

"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 it is still carrying the devices for $29.99 for the Kin One and $49.99 for Kin Two, a 50% reduction from the prices, after rebate, 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 to texting, 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 sold, but analysts speculate the number at between 1,000 and 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. Follow Matt on Twitter at @matthamblen , or subscribe to Matt's RSS feed . His e-mail address is mhamblen@computerworld.com .

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