Drilling down on the Kin

Top execs from Microsoft and Verizon Wireless talk with CNET about the new social-networking phones, why they don't have to be iPhones, and how they fit in.

SAN FRANCISCO--The Kin isn't the iPhone and it doesn't have to be.

That was the message from both Microsoft and Verizon Wireless executives at the launch of the new smartphone line on Monday.

Instead of focusing on apps, the Kin focuses on bringing together in one interface all the social networking and other tools that the "upload generation" wants in its phone.

Microsoft and Verizon are trying to sell the Kin One and Kin Two as phones that offer more than typical feature phones, but that aren't meant to rival iPhones. James Martin/CNET

But executives also took pains to characterize the Kin One and Kin Two as entry-level smartphones, not part of the feature phone market that they admit is in decline.

Instead, they tried to create a new niche aimed at those who are really into social networking but haven't gotten what they want on their phone.

In an interview, Microsoft Entertainment and Devices President Robbie Bach and Verizon Senior Vice President John Harrobin made their case for their new family of phones. Here's an edited transcript:

A couple real quick questions. Add-on applications, yes or no?
Bach: From a marketplace standpoint, there's certainly a video and music marketplace. There isn't an app marketplace, but we do support over-the-air (upgrades), so we have an opportunity as we get feedback from customers to add additional things if we choose.

We had to make a choice early on, are we going to do an integrated experience or one that is an app-specific experience. We chose from the start to be an integrated experience and I think you see that. We concentrated on the apps we thought this audience would want...Twitter, Facebook, that all comes with the device.

The user picks up this phone and they don't have to install anything. They don't have to start anything. They just have to enter their account.

Zune video--is that over the air or do you download that from your computer?
Bach: The Zune experience works exactly the way it does on the Zune HD. You get that on the PC and you side-sync to the PC. With the exception, the one big benefit the Kin has over the Zune HD, is that Zune Pass works over the air, so you have instant access to your Zune Pass music anyplace you want.

Do you download or are you streaming?
Bach: You are streaming.

Is instant messaging something that is on the device?
Bach: IM is an interesting area. The focus we took is (to) make text (messaging) IM-ish. We made it easy to do multitexts. We'll see what kind of feedback we get from people. Most of the customers we talked to are very focused, on the phone, on text versus IM. But I'm sure we'll get some feedback and we'll look at that and decide how we want to take that.

Can you talk a little bit about this market. The feature phones are a big part of what you guys sell, but my sense is that a lot of people are moving up. They are buying BlackBerrys or they are buying their first iPhone and they are buying other devices. Is this a shrinking market or do you see this feature phone market staying a big market?
Harrobin: It's still a big market. I wouldn't say it is rapidly going away, but it is definitely shrinking.

Bach: The feature phone part of the market.

Harrobin: For example, we launched a bunch of smartphones in the past year. The majority of unit sales are people going from feature phones to smartphones; they are not upgrades from smartphones to smartphones. This is what we want. This is what we like, and this is what we think Kin will help attract. It will show the utility of why (one should) get a data plan.

Microsoft is hoping the Kin appeals to the "upload generation" that broadcasts its every thought and image to Facebook and Twitter. Ina Fried/CNET

So you see the Kin more as people's first smartphone rather than as a high-end feature phone?
Bach: That's correct. In my family, I have a 13-year-old daughter and a 17-year-old daughter and they are both going to be on Kins. One of them has already--she just hasn't known what to call it. The second one has been on a feature phone today and she will move up to a Kin. I think initially the age range will be sort of 15 to 30. There's a bunch of people who are going to see the photo experience and videos and say, the heck with being 20--I'm a parent and I'm 35 and I've got pictures and video.

Harrobin: This is the best video experience phone that we've launched--the Kin Two. It's better than the Flip and the Flip sold a million units last year.

Bach: That's not even a phone, right? That's just a camera.

Where does browsing fit in for this demographic and what capabilities does the Kin browser have?
Bach: If you look at Windows Mobile 6.5, it's an upgrade from that browser. It's got all the pinch and zoom. It's been optimized for these phones; it's been optimized for this network. It's optimized for the different screen sizes as well. Obviously, with the Kin Two you have a little more real estate to work with. On Kin One, it's a little bit smaller screen. We're quite proud of the way the browser work is evolving.

Browsing is important to this audience, because they do want to get information. For this audience, it's more surgical browsing. It's not, "Oh, I think want to read The New York Times online." It's "Oh, we're going to this restaurant; how do I get there?" The Web will become part of the experience in a natural way.

Who do you see as the big competitors? Is it something like AT&T's Backflip or is it the smartphones?
Harrobin: I don't see a direct competitor. I mean, every single phone runs social networking apps, but they are just organized differently. They are siloed and linear. This is a fully native experience.

Our hope is that we capture people who are really avid social networkers and really avid in terms of their photo and video usage and bring them into Kin. And also (we hope to) train people who have feature phones that are doing a lot of texting that are--I hesitate to use the word painfully--using feature phone functionality to access social networks and give them something better, something they are willing to pay for.

Bach: We saw an opportunity in the marketplace. The product that we are going to produce that competes with the iPhone and RIM and those kind of things is Windows Phone 7. But we looked at this target audience and said--highly engaged, passionate, use a bunch of technology--This is an amazing place for us to learn, first of all, and an amazing place for us to take people who are just entering the smartphone market and give them a great experience right out of the gate.

Obviously the elephant in the room is iPhone. They just announced iPhone 4.0. How important is it for you guys, Verizon?

Harrobin: We've said publicly that we welcome carrying the phone, but that's up to Steve Jobs. Beyond that we have been steadfast on a strategy of not being reliant on one phone for our success.

With the Kin, does it fit within your standard pricing and service models or do you see different service pricing, not the device price but the service price?
Harrobin: In a few weeks, we'll make that known.

Bach: She's very cagey. She tried to ease you into the pricing discussion.

Harrobin: I'm not trying to be coy. I don't want to give competition any advantage.

Device pricing is not as tricky a thing. You want to be better than free and the iPhone is at $99, so you've got to be somewhere between?

Bach and Harrobin: laughter. (Just laughter, no facial twitches. I was looking. Don't play poker with these two).

This market, what are people coming in and looking for. What are they buying today?
Harrobin: A lot of people are looking at smartphones. It started with e-mail. Access to Facebook and Twitter and MySpace are among the most popular things people want to do.

Recently there's been a surge in interest in apps in general, but when you look at usage, we don't see the vast majority of customers using them. We see people using the basics--calling, e-mail, text, pictures, video. This is the core and it takes up most of the activity on the phone. Over time that will evolve.

Robbie, How have you guys been explaining this to your phone partners? Obviously you guys want partners in the phone business on the Windows Phone 7 side.
Bach: When I have a discussion with AT&T or I have a discussion with Orange in Europe, they are going to say they are disappointed. And then we are going to talk about Windows Phone 7 and we are going to get all engaged about what we are doing.

Likewise, he is going to have that same discussion with somebody from RIM or somebody else. It's sort of the nature of the beast.

The thing that is critical for us is that everybody understands our model is partner-centric in both Windows Phone Kin and in Windows Phone 7. In the discussion, I've had with all of the partners, they actually get that. It's very different from Nexus One, where Google basically said I don't care about your stores, I'm going to sell it myself. It's a very different model.

What about the phone makers?
Bach: The phone manufacturers have all known about this for a while. And look at the support we are getting for Windows Phone 7. We have great support from HTC, great support from Samsung, great support from LG, great support from other guys. Everybody looks at it and says the same thing--Yeah, I'm disappointed and they say "OK, let's get on with the next thing we have to do." Just like when they do a device and they use somebody else's operating system, I say "Hey, I'm disappointed" and we go on and work on the next thing.

So, I'm not buying Palm. I'm just going to rule everyone out. Can I rule both you guys out?

Harrobin: Yes.

Bach: Yes, we have enough operating systems.

 

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