BRIEFING
Just 48 days after the lunch of the Kin phone, Microsoft discontinued it because of disappointed sales. Using the 5C’s framework, this report analyzes the root causes for Microsoft Kin’s failure in the summer of 2010s. An assessment is also performed to determine what could have been done from the marketing perspective to avoid this product’s failure.
BACKGROUND
On July first 2010, The New York Times announced that Microsoft will discontinue the Kin just 45 days after the company begin selling the phone. Microsoft said it would cancel the pending release of the Kin in Europe and would work with Verizon Wireless to sell existing inventories [1]. The Kin was targeted to young users and was designed for social networking sites such as Facebook. However, Microsoft has experienced intense competition from Apple with its iPhone and recently from Google with its Android operating mobile software. After two years of development, The Kin was a failure from the beginning pursuant to a number of marketing mistakes. Several sources indicate that Microsoft only sold anywhere from 503 to 8,000 Kins.
CUSTOMER
Product & Service
The Kin was aimed at the same market the Sidekick used to own: 15 to 25 years old. After Microsoft’s purchase of Dangler in 2008, Microsoft also acquired Sidekick and spent the next two years developing the Kin as a new entry for the Sidekick demographic. However, Kin lacked a number of features used for the demographic it was targeting: speed, applications, and flash. Kin's social media feed updated every 15 minutes, making the device far from a real-time social media experience[2]. In addition, Kin lacked the strongly demanded applications and games that the iPhone and other smartphones offer. The value of sleek and well engineered hardware matters less than ever, just ask the world's largest mobile phone makers as they battle Apple's vast iPhone ecosystem of applications[2]. Lastly, Kin lacked the flash technology required to share videos. With the popularity of video sharing on the rise, how are teen-agers going to accept a phone that does not allow them to share videos?
Target Market
According to Robbie Bach, president of Microsoft’s Entertainment & Devices Division, the phones’ target was “the sharing generation” for whom “social life is their priority number one.” However, by the time Microsoft launched the Kin, teenagers already had many options to the Sidekick. Alternatives include the iPhone, Google’s Android phones, and prepaid phones for the budget conscious. Even worse, the Kin was considered a smartphone by Verizon, which required an additional $40 a month for data services. Therefore, the Kin was wrongly positioned as Sidekick alternative with limited features but at the monthly plan of an iPhone. Clearly, Microsoft did not understand its customer very well. Microsoft envisioned teenagers using the Kin for social networking, but the Kin’s functionality did not meet customer’s expectations.
Distribution Channels
Microsoft selected Verizon to distribute the Kin through Verizon Wireless stores and authorized retailers. Verizon has 2,500 stores and uses key retailers such as Best Buy, Office Depot, and Costo to distribute its phones. Verizon has near 100 million customers and operates the largest wireless voice and 3G network. Given the right product at the right price, Verizon would have successfully marketed the Kin. The problem was not the distribution channel per say, it was the wrong market positioning and price. However, given that Verizon was not willing to sell the Kin at a more affordable subscription cost, it is questionable if Verizon was, in fact, the right distributor for the Kin. Furthermore, even if Verizon had provided a lower monthly plan, the Kin could have failed because of the lack of features.
The Kin was aimed at the same market the Sidekick used to own: 15 to 25 years old. After Microsoft’s purchase of Dangler in 2008, Microsoft also acquired Sidekick and spent the next two years developing the Kin as a new entry for the Sidekick demographic. However, Kin lacked a number of features used for the demographic it was targeting: speed, applications, and flash. Kin's social media feed updated every 15 minutes, making the device far from a real-time social media experience[2]. In addition, Kin lacked the strongly demanded applications and games that the iPhone and other smartphones offer. The value of sleek and well engineered hardware matters less than ever, just ask the world's largest mobile phone makers as they battle Apple's vast iPhone ecosystem of applications[2]. Lastly, Kin lacked the flash technology required to share videos. With the popularity of video sharing on the rise, how are teen-agers going to accept a phone that does not allow them to share videos?
Target Market
According to Robbie Bach, president of Microsoft’s Entertainment & Devices Division, the phones’ target was “the sharing generation” for whom “social life is their priority number one.” However, by the time Microsoft launched the Kin, teenagers already had many options to the Sidekick. Alternatives include the iPhone, Google’s Android phones, and prepaid phones for the budget conscious. Even worse, the Kin was considered a smartphone by Verizon, which required an additional $40 a month for data services. Therefore, the Kin was wrongly positioned as Sidekick alternative with limited features but at the monthly plan of an iPhone. Clearly, Microsoft did not understand its customer very well. Microsoft envisioned teenagers using the Kin for social networking, but the Kin’s functionality did not meet customer’s expectations.
Distribution Channels
Microsoft selected Verizon to distribute the Kin through Verizon Wireless stores and authorized retailers. Verizon has 2,500 stores and uses key retailers such as Best Buy, Office Depot, and Costo to distribute its phones. Verizon has near 100 million customers and operates the largest wireless voice and 3G network. Given the right product at the right price, Verizon would have successfully marketed the Kin. The problem was not the distribution channel per say, it was the wrong market positioning and price. However, given that Verizon was not willing to sell the Kin at a more affordable subscription cost, it is questionable if Verizon was, in fact, the right distributor for the Kin. Furthermore, even if Verizon had provided a lower monthly plan, the Kin could have failed because of the lack of features.
Promotion
Using the 6’M framework, we analyze the tasks in planning a communications strategy:
- Market: The Kin was targeted to 15 – 25 year old social media users but the product did not have the adequate features used by this market segment.
- Mission: Microsoft’s mission was to communicate the benefits of the Kin to its target market. However, given that the product was wrongly positioned, it could not communicate the benefits that it aspired.
- Message: Microsoft failed to communicate the benefits of automated cloud back up on its advertising. The Kin was the only phone at the time to be able to back up all phone contents online, including contacts, pictures, and messages automatically online.
- Media: Microsoft used the right media to convey the wrong message.
- Money: A less than a smartphone for the price of a real smartphone.
- Measurement: It did not take too many days for Microsoft to realize Kin’s failure.
Pricing
The Kin phones were too pricey from the beginning. They weren't exactly a smartphone, but they were priced as one. The Kin One costs $130, and the Kin Two $150 with a two-year Verizon contract (before a mail-in rebate). Verizon dramatically slashed the Kind prices in late August of 2010 by $100, with the Kin Two at a mere $50 and Kin One at $30[3]. Regardless, price alone was not the main reason that the Kin failed in the first place. According to Advertising Age:
“Kin was a poorly designed product filling a poorly defined niche… pricing may have been part of it—but not as big a part as the fact the phone didn’t do much of what its target audience expects from a phone these days”[4].
The most damaging aspect of the Kin pricing strategy was the monthly service fee. Since Verizon considered the Kin a smartphone, it also required data and voice charges amounting to $70 per month. This monthly fee is more than most teenagers can afford, and the ones who can afford it, could easily instead select a real smartphone. Microsoft might have had a shot with Kin if it had convinced Verizon to offer pricing like boost mobile’s $50 monthly prepaid plan, which includes unlimited talk and data [5].
COMPANY
Microsoft develops, manufactures, licenses, and supports software products for many computing devices. Below is a SWOT analysis for Microsoft[6]:
COMPANY
Microsoft develops, manufactures, licenses, and supports software products for many computing devices. Below is a SWOT analysis for Microsoft[6]:
Strengths | Weaknesses |
|
|
Opportunities | Threats |
|
|
COMPETITORS
Microsoft continues to face intense competition across all markets for its products and services. In the smartphone market, Microsoft faces RIM, Apple, HTC, Samsung, Palm, and others. In the mobile phone operating system area, Microsoft competes with open source systems such as Symbian, Linux, and Android. Key closed source systems include RIM Blackberry OS, iOS from Apple, and Palm webOS. However, Android has been growing in popularity as fast as 886% in the second quarter of 2010[7]. Clearly, Microsoft’s key competitor is Google as it recently decided to compete head to head with Microsoft in the operating system market. By focusing on developing the Kin for two years to access social media, Microsoft may have gotten distracted, and left a door open to allow Google to en
ter its operating system market.
COLLABORATORS
In order for Microsoft to successfully sell the Kin, it had to offer more applications. Microsoft needs partners committed to developing applications that run on Windows Phone 7. Apple currently has more than 200,000 applications in its Application Store [8]. Google, arguably Microsoft's biggest competitor in the market, has more than 50,000 applications available [8]. Another option for Microsoft was to partner with cell phone providers as Google has been successfully doing with Android. Microsoft could have offered its Windows Phone 7 operating system on multiple phones allowing it to gain more market share. Instead of focusing on focusing on Microsoft’s core competency, which is developing operating systems, Microsoft chose to focus on hardware. Without enough collaboration with strategic partners and developers committed to use Windows Phone 7, Microsoft is at risk of losing market share in the mobile operating system sector.
CONTEXT
Spotting key changes before a competitor does is critical to remain competitive. This includes changes in the context of politics, economy, society, and technology. For simplicity, we’ll focus on changes in technology that Microsoft should have spotted when it started developing Kin. While Microsoft developed the Kin, there were many technological changes including the growth of iPhone applications. By the time the Kin was introduced, teen-agers consumer preferences changed because they now had more options. Microsoft missed the boat by introducing the Kin too late. Microsoft should have instead taken into consideration the technological changes to better position the Kin in the market.
ASSESSMENT
Microsoft (MS) should have collaborated with developers to create more applications.
- MS could have partnered with vendors to have its mobile operating system on multiple phones.
- Features such as speed, applications, and flash technology would have better positioned the Kin.
- Kin’s innovative features such as automated cloud backup should have been better advertised.
- MS should have watched Google closely before it attacked MS’s core competency with Android.
- MS should have also negotiated with Verizon or with another carrier to offer the Kin at a lower monthly fee affordable to its young target market.
- MS should have better spotted technological changes as it introduced the Kin at a time when most of its functionality was already obsolete.
CITATIONS
1. Helft, M., Microsoft Kin Discontinued After 48 Days, in The New York Times. 2010.
2. Why Microsoft Killed Kin Six Weeks After Launch, in Media. 2010, Haymarket Media Limited.
3. Lonescu, D. Why Microsoft's Kin Phones Were Destined To Fail. 2010 [cited; Available from: http://www.networkworld.com/news/2010/070110-why-microsofts-kin-phones-were.html?hpg1=bn.
4. Enough Already With The Silly Marketing Excuses, in Advertising Age. 2010, Crain Communications, Inc.
5. Hardawar, D. Courier, Kin, and Microsoft’s relentless failure to innovate. 2010 [cited; Available from: http://royal.pingdom.com/2010/05/25/courier-kin-and-microsofts-relentless-failure-to-innovate/.
6. Microsoft Corporation Company Profile. 2010, Data Monitor.
7. Android Smart Phone Shipments Grow 886% Year-on-Year in Q2
2010. 2010 [cited; Available from: http://www.canalys.com/pr/2010/r2010081.html.
8. Ten things Microsofts Mobile Chief Must Do to Beat Google Apple. 2010 [cited.
2. Why Microsoft Killed Kin Six Weeks After Launch, in Media. 2010, Haymarket Media Limited.
3. Lonescu, D. Why Microsoft's Kin Phones Were Destined To Fail. 2010 [cited; Available from: http://www.networkworld.com/news/2010/070110-why-microsofts-kin-phones-were.html?hpg1=bn.
4. Enough Already With The Silly Marketing Excuses, in Advertising Age. 2010, Crain Communications, Inc.
5. Hardawar, D. Courier, Kin, and Microsoft’s relentless failure to innovate. 2010 [cited; Available from: http://royal.pingdom.com/2010/05/25/courier-kin-and-microsofts-relentless-failure-to-innovate/.
6. Microsoft Corporation Company Profile. 2010, Data Monitor.
7. Android Smart Phone Shipments Grow 886% Year-on-Year in Q2
2010. 2010 [cited; Available from: http://www.canalys.com/pr/2010/r2010081.html.
8. Ten things Microsofts Mobile Chief Must Do to Beat Google Apple. 2010 [cited.
0 comments:
Post a Comment