Microsoft scraps Kin smartphones

SEATTLE: Microsoft Corp scrapped the new Kin social-networking smartphone because sales fell well short of the company’s expectations, a person with knowledge of the decision said.

The phone’s high price contributed to lackluster demand, said the person, who declined to be named because the discussions were private. Microsoft announced plans to end work on the Kin earlier today, saying it would focus on Windows Phone software. The device debuted less than two months ago.

Kin, sold through Verizon Wireless, marked Microsoft’s first major foray into the hardware design of a mobile phone. It was part of a dual strategy of developing its own phone while working on new Windows software for other companies’ handsets. Verizon’s price cuts of the Kin on June 28 may have come too late to save the phone.

“Sales weren’t going that well at Verizon, so better to kill it than have it fester on,” said Ken Dulaney, a Gartner Inc analyst in Redwood City, California. “Verizon did a very poor job advertising this thing. The price of the data plan was a killer.”

Verizon required an unlimited data plan for $29.99, plus a voice plan. The phones were released May 6 online and went on sale in stores May 13. Those models will remain available.

“We will continue to work with Verizon in the US to sell current Kin phones,” Redmond, Washington-based Microsoft said in a statement.

Brenda Raney, a spokeswoman for Basking Ridge, New Jersey- based Verizon Wireless, said the Kin “is still an important part of our portfolio.”

Lower price
Verizon cut the price of the Kin One to $29.99 from $49.99, with a $100 discount and a two-year contract. The price of the Kin Two, which has a larger screen and takes sharper photos, was reduced to $49.99 from $99.99.

The Microsoft team working on the product has been folded into the Windows Phone unit, the company said. A planned release of the devices in Europe has been canceled.

Microsoft will now focus its attention on its mobile operating system, which has been losing market share to software from Apple Inc and Google Inc. Mobile-phone makers will begin offering devices with Windows Phone 7, a complete overhaul of the software, later this year. It’s critical that those phones fare better than the Kin, Dulaney said.

“The big bet is on Windows Phone 7 — if they don’t get that right, they’re in big trouble,” he said. The Kin “was a sidecar effort.”

Microsoft’s Windows operating system accounted for 6.9 per cent of the worldwide smartphone-software market in the first quarter, down from 10.8 per cent a year earlier, according to Michael Morgan, an analyst at ABI Research. Shipments of the iPhone rose to 15.8 per cent, while Android-based phones took 9.9 per cent.

Microsoft’s decision was reported earlier by Gizmodo.