Something isn't quite kosher about this bombshell bit of news in the smartphone wars. Yes, I said its a bloodbath, and yes, I just remarked last week that Microsoft is pretty confused, but I didn't see this coming. Microsoft has just announced that they will stop the roll-out of Kin phones, cancelling their European launches and terminate the project. They will supply Kin phones to their US carriers but the staff has already been assigned to the Phone 7 smartphone operating system project.
It is less than 6 weeks from when the two Kin phones were launched in the USA. We have heard rumors that their initial sales were lousy, but how bad does it have to be, that the world's biggest software company pulls the plug on its inaugral smartphone handsets in only 6 weeks? This is a huge disaster for Microsoft and at the very least signals major problems in professional management. And to me, this news does not smell right. There has to be more to the story.
To be clear - the normal development cycle from a fresh piece of paper to first phones sold to customers, in mobile phones, is about 18 months. Microsoft bought Danger (makers of the popular youth phone 'Sidekick' with a QWERTY keypad) some time ago to make their big move into the phones handset business. And Microsoft has been heavily involved in smartphones from the Windows Mobile operating system for most of the past decade. Its been the second most popular smartphone operating system, and about four years ago was in roughly one out of every four smartphones sold. Microsoft 'should' have known what they were doing.
The QWERTY phone market is bigger than the touch screen phone market, and decidedly so in the home market for Microsoft, the USA. The recent transition for most buyers of QWERTY phones has shifted from business oriented phones to youth phones. The two models of the decidely youth-oriented Microsoft Kin phones seemed to arrive perfectly at the right time in the right place. Just earlier this year we learned that a third of American youth send 100 SMS per day - and 42% of US youth can send SMS text messages blindly. These are the perfect customer segment for the Kin phones, and what should have been an added bonus, every month that Apple delays its own QWERTY phones, gives more of this market segment to those phone makers who do. If you send so many SMS that you can text blindly, you won't consider an iPhone as your primary phone, no matter how great the iPhone 5 or 6 may be haha (unless a version is released with QWERTY). And as one of the world's biggest QWERTY phone makers is Nokia, and its US market share is in a tailspin - all signs pointed to a rosy reception of the Kin.
But it obviously wasn't. The rumors said the sales of Kin were dismal. Which brings me to the first problem. Its pricing. If the target was youth, what was that dumb pricing strategy that Microsoft and its US carriers offered? That was going to hurt sales badly. But if it was just price - that should have been an easy 'fix'. In fact we have already heard that Kin prices are being cut in the USA.
So - problem number 1. How incompetent were the managers of the Kin project to launch it with clearly faulty pricing? But Microsoft, why not try to fix this? It could not come down to only price, else the Kin phones would still be alive.
Then there has to be far worse news. Is it that the youth who tried the phones not just disliked them, but hated them? Is that it? That the Kin phones were totally unpalatable to the youth, at any price? If so, where was the market research before the launch? Is it really true, that the world's most profitable tech company didn't do any targeted market research of its prototype phones before launching it to such big global media attention? Is it really true, that these phones were ultimate dogs, utterly beyond achieving any sales success?
Or is it something else? Was there some internal politics at Microsoft at play? Was there some contractual obligation to Danger employees that Microsoft had to release 2 phones so they cannot resign? I have no idea. But like I said, this does not smell right. To terminate the project within 6 weeks from launch, and without even attempting a newer lower price strategy with the European launch (the European phone market is far bigger than the US market...)
Could it be that the Microsoft Phone 7 project is so desperately behind, and the only viable competent internal staff to help in some emergency help to it, is the Danger ie Kin ie Project Pink team? Remember its just a little while since CEO Steve Ballmer took the whole Microsoft Mobile project to his personal supervision and effectively married his own reputation to the success of Phone 7's launch. But even that doesn't make sense, they could have 'borrowed' the Kin team to Phone 7 for the rest of the year, frozen Kin phone development - but allowed the European phones to be launched.
No, this does not smell right. I hope at some point we'll learn what happened. Maybe one day some retired Microsoft manager will write a kiss-and-tell book haha..
PS did I say it is a bloodbath in smartphones?