July 1, 2010

Microsoft Cutting Its Kin Phone Line

Microsoft Corp decided this week to pull the plug on its new generation of smartphones just after three months of unveiling the device.

Microsoft Corp. unveiled two Kin phones in April, the Kin One and the Kin Two.  The devices both have touchscreens and slide-out keyboards, and were marketed to appeal to a younger generation that wanted to share Web snippets, photos and video with friends.

Microsoft said Wednesday that it canceled plans to sell its "Kin" smartphones in Europe this fall.  The company also said that the internal team working on the device would be combined with the group working on Microsoft's new Windows Phone 7 software due out later this year.

"We will continue to work with Verizon in the U.S. to sell current Kin phones," Microsoft said in an emailed statement.

The move underscores the challenges facing Microsoft as it strives to adapt to consumers' new taste for handheld Internet-connected handheld devices.

Microsoft said in April that it was shelving an internal project to try and develop a tablet PC similar to Apple's iPad.

Microsoft reorganized its mobile phone and video game division last month by announced that executive Robbie Bach would retire and that the senior vice presidents in charge of the division would report directly to Chief Executive Steve Ballmer.

Ballmer is "looking at the (mobile) business, seeing what's making money, what makes sense to do going forward," Matt Rosoff, an analyst with Directions on Microsoft, told Reuters.

The Kin smartphones represented Microsoft's attempt to start designing its own phones.  Microsoft began selling the Kin phones with Verizon Wireless in May.

Rosoff said the phones lacked certain key smartphone functions, such as the ability to install software applications.

The Kin was based on special Microsoft software called Windows Phone OS.

"Windows Phone 7 is the real mobile strategy," said Rosoff. "The fact that it (the Kin) was ever released in the first place was a mistake. When they went with Phone 7, they should have quietly killed this project."

Verizon Wireless spokeswoman Brenda Raney told Reuters that the Kin remains an important part of the company's "portfolio."

According to research group Gartner, global sales rose about 50 percent in the first quarter.

Gartner said that Microsoft had a 6.8 percent share of the global market for smartphone operating systems in the first quarter of 2010.  Google's Android had 9.6 percent, Apple's iPhone had 15.4 percent, and Nokia's Symbian software had a 44.3 percent share.

RBC Capital Markets analyst Robert Breza told Reuters that the battle to win the smartphone market is still in its early stages.

"With their vast amount of resources, I would never want to count out Microsoft," he told Reuters. "They can acquire their way into it. They can approach it in a different strategy."

Neither Microsoft nor Verizon Wireless would say how many Kin phones have been sold.  Verizon cut the price of the Kin phones on Monday from between $30 and $50.


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