Bowing Out with Grace, Microsoft Retires Kin and Moves On
Earlier this year, after two short months on the market, Microsoft decided to retire its “Kin”, a social media-centered mobile phone. In spite of strong reviews, the phone sold poorly, and Microsoft faced a key decision for its future in a market they had experienced relatively little success. On Thursday, a key executive in Microsoft’s mobile business revealed that the company will no longer pursue development of a new smartphone device.
The statement from Tivanka Ellawala, Microsoft’s CFO of mobile communications, comes at a critical juncture for the company’s efforts to become a true player in the mobile industry. Microsoft has developed Windows Phone 7 software, which has been promised to be a drastic improvement upon earlier versions of Windows’ mobile OS. Microsoft has thus far refused to reveal the manufacturers of the phones that will utilize the Windows Phone 7 software, but the company included hardware specifications, which Ellawala allows for “more predictability in what it takes to make the hardware work with the software.”
One of the crucial elements that the success of Windows Phone 7 hinges on is the adoption by the developer community. In an effort to stimulate development of mobile applications for WP7, Microsoft released a software development kit intended to help developers maximize revenue earned from advertisements.
To many investors, the shuttering of the failed Kin line was indicative of Steve Ballmer’s willingness to move on from products and projects that are losing money. In the past, Ballmer has been criticized for holding on too long to projects that were outside of Microsoft’s areas of expertise and were bleeding money. As Ellawala noted, Microsoft is in the software business, and that is where they need to maintain their focus. When one explores Microsoft’s efforts in mobile, the slang term “diworseification” comes to mind.
In spite of record cash flows and revenues, Microsoft’s stock price has remained relatively flat over a five-year period, getting lapped by competitors like Apple and Google. With the booming success of Halo: Reach, growing anticipation for Windows Phone 7, and the enticing prospects of an enterprise PC refresh cycle, Microsoft is in a healthy position moving forward.