Amid anemic sales, Microsoft has decided to halt work on its Kin phone less than two months after the product hit the market.
The social media-oriented phone will not make its planned European debut and Microsoft is shifting the entire Kin team to work on Windows Phone 7, the Microsoft smartphone operating system due out later this year. Andy Lees, who heads up the company's cell phone efforts announced the move to Microsoft workers earlier on Wednesday, according to a source close to the company.
Microsoft confirmed the move in a statement to CNET.
"We have made the decision to focus exclusively on Windows Phone 7 and we will not ship KIN in Europe this fall as planned," the company said. "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."
The Kin, which made its debut just two months ago at an event in San Francisco, was the result of several years of work by Microsoft and stemmed from its 2008 acquisition of Sidekick maker Danger. However, despite a few innovative features including streaming music and a Web-based companion site, the Kin phones were criticized for missing key features, such as a calendar, as well as because the monthly fees for the phone were as high as more capable smartphones, such as the iPhone and Android-based devices.
With Microsoft's decision, it is now unclear whether there will ever be software updates to the phone, including one originally planned for this summer. Over the weekend, Verizon cut the price on the two Kin models by as much as 50 percent.
Microsoft won't say how much it spent on the Kin launch, but it has been backed by significant TV, Web, and print and radio advertising campaigns.
Neither Verizon nor Microsoft would say how many devices were sold, but a source told CNET that the number of Kins sold thus far is more than 1,000 but south of 10,000--significantly below expectations.
"We don't share sales data or marketing strategies but the device remains an important part of our portfolio," a Verizon representative said in a statement.
Roz Ho, the Microsoft executive who lead the unit that developed the Kin will oversee the transition of the team and then move to an as-yet-determined role at the company, according to a source.
Despite spending several hundred million dollars to buy Danger, Microsoft has little to show for the purchase, aside from some bruises to its image. The first hit came last year with a major outage and data loss to Danger's flagship product, the T-Mobile sidekick.
The Kin marked several years of work on a top-secret "Pink" project aimed at developing new devices and services for the same youthful, always-connected demographic that had once been attracted to the Sidekick. It is unclear what, if any of the Pink effort might find its way into Windows Phone down the road.
The demise of the Kin adds to the pressure on the Windows Phone 7 team to deliver a compelling product this holiday season. Microsoft got some plaudits when it unveiled the new-look operating system at Mobile World Congress. However, since then Android has continued to rapidly gain momentum and sales, while Apple has unveiled a new iPhone and new version of its operating system that added support for video conferencing, multitasking and more.
Update, 2:40 p.m.: Added comment from Verizon Wireless representative.
Update, 2:55 p.m.: Added additional background on Windows Phone 7 and Microsoft's purchase of Danger.
Update, 3:25 p.m.: Added that, according to a source, Kin sales have been greater than 1,000 but less than 10,000 units, well below expectations.