Thursday, July 15, 2010

Why Kin Failed and the new Smartphone Paradigm

What's a Kin??
Microsoft launched the "Kin" phone on April 12th this year with two models imaginatively dubbed "Kin One" and "Kin Two" ...six weeks later, the project is dead.

Estimated to have cost Microsoft north of 1 billion to develop, the Kin is the most spectacular product failure the tech world has seen in a long time. While Android handsets are flying off the shelves at a rate greater than 160,000 units per day (Update: as of July 20th that number is now greater than 200,000 per day) , Microsoft's Kin has sold fewer than 8,000 handsets in the six weeks since launch. How did Microsoft manage to fail so successfully? read on to find out.

How to Fail: Part 1
The Kin is the result of Microsoft's "Project Pink" a phone initiative that grew out of Microsoft's purchase of Danger Incorporated. Danger was a 2000 Palo Alto start-up that got an early foot in the mobile cloud-computing door and produced the popular "Sidekick" line of somewhat-smart... phones. When Microsoft purchased Danger in 2008 they allowed Danger's top executive, J Allard, to continue development on what was now a new Microsoft product. The story get's a little fuzzy here but Engadget reports that sometime between Allard getting appointed Project Pink lead and the launch of the Kin, Allard was forced out of the project and it was taken over by Windows Phone 7 lead and Microsoft Senior VP Andy Lees who also continued to lead WP7 development. Windows Phone 7 was way more important to Microsoft than Project Pink and the Rumor is that Lees did not think Microsoft needed two completely separate phone initiatives and did not really care where Project Pink went. How to fail? fire the visionary and replace him with someone who has more important things to do.

How to Fail: Part 2
Reviews of the kin were oddly bi-polar. I don't mean to say that some reviews were very good and some reviews were very bad, I mean to say that all reviews absolutely loved some aspects of the Kin and absolutely hated other aspects, no really; ALL of the reviews were like that, go read one. With a name like Microsoft behind them the Kin are touchscreen phones that on first blush appear to promise competent implementations of all the features you'd expect from a high caliber smartphone. They don't offer all those features however and Microsoft never intended them to, they are intended to be the Sidekicks spiritual successor and target the frequently texting tween/teen demographic. Unfortunately for Microsoft the targeted demographic moved on while project pink was in development and like every other demographic on the planet now wants a phone that is great at texting AND great at lots of other things ala Android or iPhone. There is no point in walking around with a Kin when the same monthly payments will get you a Droid, it was absolute suicide of Microsoft and Verizon to require a full data plan for Kin. How to fail? Target a 2008 demographic in the year 2010.

The New Smartphone Paradigm. Why Kin never had a chance.
The iPhone launched in 2007 to huge fanfare and even huger success. I have to hand it to Apple for managing to coax a smooth GUI out of the abysmally slow 400mhz ARM11 processor that the original iPhone launched with. It was accomplished by using the GPU to power 2d transitions instead of confining it to it's traditional roll of only 3d rendering work. The next year Google launched the G1, a phone that while hugely capable was hampered by heinously ugly hardware and horribly choppy software. It captured a profitable but insignificant 1% of the smartphone market as the iPhone climbed through 15% market share. The iPhone continued to dominate and single-handedly turned around the fortunes of AT&T and their crappy GSM network. AT&T achieved higher growth, higher average profit per customer, and a higher percentage of smartphone users than  the other 3 major wireless carriers all on the back of the iPhone. While Apple's hugely effective marketing definitely helped sales, the iPhone gave people something that they desperately wanted, the internet everywhere and always. When it first launched the iPhone was in it's own more expensive pricing tier but that has changed. All four major wireless carriers now have identical monthly charges for all their smartphones (Though Sprint charges $10 extra for 4g capable models). When the total cost for a two year contract is running you 2-3k it's a pretty easy decision to fork over another $50- $200 at the start of the contract for a phone that does almost everything your laptop can do plus a lot of things it can't do. When the price premium to get the absolute best on the planet is less than 10%, most people will do it, especially when they will spend more time interacting with the device in question than with any other device. Contrast this with planes, trains, automobiles, houses, computers and pretty much everything else where the best costs thousands of percent extra. This new paradigm polarizes sales. The best win by even more, and everyone else loses horribly. This is why Verizon ran out of Droid Xs (after claiming they wouldn't run out no less) and Droid Incredibles and Droids. This is why Sprint ran out of Evo's, AT&T ran out of iPhones and T-Mobile ran out of nothing because they inexplicably have failed to provide a high end device to their customers. Which brings me back to the Kin. The Kin was powered by an anemic ARM11 cpu of still undisclosed clockspeed with a crappy low-res screen and a pretty but choppy user interface, the all-important web browser was described by Anandtech as "abysmally slow" and while usable, it was less than half as fast as other internet-everywhere smartphones.

It would have been cutting edge in 2007 but in 2010 it's just an embarrassment. Microsoft was hoping the Kin would be seen as the smartest dumb phone but it was clearly the dumbest smartphone. Particularly damning was it being priced alongside other far more capable smartphones. Who in their right mind would pick up a Kin when the Droid Incredible with it's 1ghz cortex A8 cpu, high-res OLED screen and Android goodness is the same monthly price?

Uninspired leadership, targeting non-existent demographics, and bringing a knife to a gunfight spelled doom for the Kin. Windows Phone 7 is looking promising though and the Kin is only strike two for Microsoft. We'll see if Windows Phone 7 can play in the big leagues this winter.

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