IT giant pulls 'ill-conceived' smartphone before UK launch

Microsoft has scrapped the UK launch of its social-networking smartphone, the Kin, and announced it will discontinue the product in the US after just eight weeks, chalking up another failure in its attempts to match Apple in the consumer electronics market.

Robbie Bach, who leads Microsoft's entertainment division, which developed the Kin, was pushed out in May and his successors took an early decision to abandon the project. An advertising campaign failed to counter hostile reviews for the phone and sales proved terrible.

The Kin had been slated for launch in the UK in September, via Vodafone. Although the phone claimed to offer an all-in-one social networking experience, it suffered by comparison with smartphones such as the iPhone, for which users can choose from a menu of thousands of third-party applications to broaden the range of things the phone can do.

"The phone was ill-conceived from the beginning," said Shelly Palmer, the founder of Advanced Media Ventures. "Everybody in smartphones thinks they are competing with Apple, but they are not. They are competing with Apple plus an army of third-party developers. They completely misunderstood the marketplace. Every other phone out there has more features than the Kin."

Microsoft's pursuit of the cool factor in consumer electronics hardware has led it into several notable disasters, including the Zune, a digital music player launched in 2006 as a serious rival to Apple's iPod. Only its Xbox gaming console has proved to be a hardware hit.

The company said its smartphones division would now concentrate on software and on the launch of Windows Phone 7, the forthcoming version of its mobile operating system, which it hopes will become as ubiquitous on phones as Microsoft Windows is on personal computers. "We are integrating our Kin team with the Windows Phone 7 team, incorporating valuable ideas and technologies from Kin into future Windows Phone releases," a spokesman said.

Ronan de Renesse, the head of mobile media at Screen Digest, said Microsoft is falling further and further behind in the battle for market share in smartphones. Last year, Windows software powered 14.2 million smartphones sold around the world, placing it fourth behind Nokia's Symbian and the operating systems for Blackberry and the iPhone. This year, Microsoft has been leapfrogged by Google's new, free operating system Android, which is attracting strong interest from third-party developers. More than twice as many Android phones will be sold this year than Windows phones.

Mr Renesse said that Microsoft's early start in phone software is now a handicap. "In 2003 and 2004, the market was completely different. Smartphones were targeted at a business audience, not at the consumer. The switch happened with the launch of the iPhone, and now the market is accelerating and you have to be able to adapt quickly to consumer and developer demands."

Mr Palmer blamed a balkanised internal culture at Microsoft. "It was iTunes that made the iPod. It was the app store that made the iPhone. I don't understand why Microsoft isn't building on its successes," he said. "The Xbox decimated the Sony PlayStation 3, so I don't understand why they aren't building on that gaming platform."

Microsoft misfires

* The Zune had nothing on the iPod. Microsoft's plan to put a big dent in Apple's share of the digital music player market failed spectacularly, despite several relaunches and the development of upgraded models in the years after the first devices went on sale in 2006.

* Oops. What should have been a triumphant demonstration of Microsoft's voice recognition technology turned to disaster in 2006 when an executive tried to begin a letter. Instead of "Dear Mum", the software rendered her words – and her attempts to correct them – as "Dear Aunt, let's set so double the killer delete select all."

* Windows Vista was a "bust" – the public conclusion of executives at PC maker Dell, which is normally painfully polite about its business partners. It took Microsoft five years to launch an upgrade to its famous operating system, and the two-year delay had done little to iron out the bugs. Although it came pre-installed on consumer PCs, businesses failed to upgrade from the older Windows XP.