Why Microsoft Killed Kin After Just Six Weeks

Pricing, Not Marketing, Is Likely Cause in This Case

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LOS ANGELES (AdAge.com) -- In what may be one of the fastest launch-to-failure paths ever taken by a major marketer, Microsoft's Kin, the company's first phone product, is being discontinued just six weeks after its May 13 launch. As first reported by Gizmodo, the phone's marketing and product development teams are being shifted to work on the launch of the Windows Phone 7.

Departed Kin: Microsoft's social media-centric phone is being discontinued.
Departed Kin: Microsoft's social media-centric phone is being discontinued.
"Microsoft has made the decision to focus on the Windows Phone 7 launch and will not ship Kin in Europe this fall as planned," a Microsoft spokesperson told Ad Age in a statement. "Additionally, we are integrating our Kin team with the Windows Phone 7 team, incorporating valuable ideas and technologies from Kin into future Windows Phone releases. We will continue to work with Verizon in the U.S. to sell current Kin phones."

What went wrong? Despite an ambitious, narrative marketing campaign that sought to associate the Verizon Wireless-supported phone with the lifestyle of young, social media-savvy consumers, it doesn't appear to be marketing that killed the Kin but just good old-fashioned pricing.

The Kin One was priced at $49.99 while the Kin Two was a full $99.99 after their respective $100 rebates, coupled with a mandatory $30 monthly service fee that many consumers resisted. MarketWatch first reported that Microsoft only sold 500 phones during Kin's first six weeks, a figure that Microsoft representatives would not confirm or deny. Even a last-minute price slash on June 24, knocking $20 off the Kin One and $50 off Kin Two, appeared to be too little too late.

Still, the ambitious launch campaign is a cautionary tale for marketers looking to use social media as a tactic. Created by Interpublic Group of Cos.' T.A.G., recently renamed agencytwofifteen, the campaign followed 24-year-old Brooklynite Rosa Salazar as she used her Kin to connect with her friends via text messages, Facebook, MySpace, Windows Live and Twitter, with her friends' updates rising to the top of her feed. The campaign used insights from more than 50,000 20-something consumers to appeal to the hipster, metropolitan crowd. But the campaign was limited by the phones' own shortcomings -- neither model had the ability to download apps, share media via Twitter, schedule events on a calendar or use GPS. A spokeswoman for agencytwofifteen had no comment, and executives for Microsoft's media agency Universal McCann did not return calls. Razorfish is the digital agency of record.

The Kin's failure echoes Microsoft's other expensive grab for Apple's share -- the Zune, which in 2006 tried to steal a hefty portion of the iPod's overwhelming command of the MP3 market. After nearly $30 million in measured media during its first nine months, the music player only mustered a 2.2% share of the MP3 market, according to NPD.

Microsoft's Windows mobile operating system has been steadily losing share and in first quarter powered only 6.8% of smartphones sold, according to Gartner, behind Symbian, Research in Motion, Apple and Android. That's down from 10.2% for the year-earlier quarter.

Microsoft's Windows 7 phone is expected to launch in the fourth quarter of this year.

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