Microsoft’s Kin: Too Little, Too Late

Microsoft’s Kin phones, unveiled today, are beautifully designed and laid out, and do a great job of integrating Facebook and MySpace (NYSE: NWS).
But they are missing a lot of key elements that phones have today: There are no apps and no games, and there’s no instant messaging or calendar….the list goes on. So the question is: is Microsoft (NSDQ: MSFT) pushing out the Kin too early?

Actually, probably too late. Other phones in the same feature-phone category from LG (SEO: 066570), Samsung or Nokia (NYSE: NOK) are more polished. That’s especially true when the Kin is compared to smartphones from Palm (NSDQ: PALM) or Google (NSDQ: GOOG) and Apple’s iPhone, which have had a couple of years to smooth out the rough edges. For Microsoft to make a dent in the insanely crowded market, it and Verizon will have to price and market the phone perfectly in May when the Kins go on sale.

It’s not that the duo doesn’t have a chance, but the critical component, which wasn’t announced today, is the pricing — the upfront cost of the hardware and the monthly voice and data plan.

Now is definitely the time to get creative. The problem is that Verizon Wireless, which is one of the premium carriers in the market, will be reluctant to slash its data plans for the teenage segment. And yet, the precursor to the Kin — the Sidekick — was on the T-Mobile network and offers some of the best values in the U.S. Is there a way for Verizon to keep its average revenue per subscriber high, while also offering an attractive package to the consumer that is cheaper than the Droid, and other smartphones, like the BlackBerry?

Here are the two things to look for:

– Data plans: The $30-$40 unlimited data plans will be a hard sell among this demographic. Instead, Verizon could implement a family plan data plan that would provide incentive among parents to buy the device for their kids. Analyst Chetan Sharma has proposed that under a family plan, you could sign up for a data bucket, which is more affordable than every individual signing up on his/her own, but still gives Verizon the kind of return it is looking for. A recent example of an offer like this was when Verizon Wireless launched the Palm Pre and as part of the device’s pricing scheme, let users tether multiple wifi devices, like laptops or an iPod to the device for internet access — for free. There’s obviously some wiggle room available.

– Premium offerings: The second option is for Microsoft to subsidize the device. Already, Microsoft has a financial partnership with Verizon surrounding Bing. As the exclusive search provider, Microsoft cuts Verizon a piece of all its search revenues. Microsoft could do the same thing for other services, such as the Zune subscription music service, Xbox or other Microsoft-branded services that could come to the phone. The Kins will be the first phones to offer full Zune services, but no pricing plans have been announced. With the prospects of selling additional content, Verizon may be compelled to drop the price of the service.

Outside of the pricing plans, the devices have some potential. The big selling points involve the way the phones integrate with social networks and the way they sync to the cloud.

The phone has three home pages with the central page linking to the “loop.” The loop is where you can connect to the people you talk with, Facebook or email the most. The user interface looks like a flashy magazine layout with some pictures being larger than others, which can be based on the importance of those people in your life. The “spot” is where you share photos, restaurant locations or other content with your friends. Simply drag and drop the photo to the dot at the bottom of the screen, and then drag and drop the photo you want to share, and then choose to email or send it to all of those people. The integration is fairly slick, but once again, falls short in a couple of areas. It’s only integrated with Facebook, MySpace and Windows Live — for instance, you can’t send a photo to Twitter.

The second standout feature of the device is the way it syncs to the internet. Everything is uploaded to a web interface in real-time, including incoming calls, outgoing calls, text messages and photos. Login to your web account, and you can see all of your events spread out on a horizontal time line. The events can be sorted by day, week or month. Over a year, you can see how you could easily flip through the timeline like you would a physical photo album, which hasn’t had an equivalent in the mobile world.

The hardware comes in two different forms. The Kin 1 and the Kin 2. The Kin one is a vertical slider and looks a bit like the Palm Pre and can be handled easily with one hand. The Kin 2 is a horizontal slider with a full keyboard. The Kin 2 has a 8 megapixel camera, capable of shooting HD video, unlike the Kin 1, which has a 5 megapixel camera and can’t shoot in HD.