It's a great question. The same should be asked of many recent Microsoft initiatives. It's okay to roll the dice, but someone somewhere should have noticed.
My friends on the Kin team seem to have been caught by surprise. Those of us who watched for years from the outside: less so.
> My friends on the Kin team seem to have been caught by surprise
And that's the whole point. There must have been some serious reality distortion inside the company for this project to go on for as long as it did. It was obvious, from anyone but the most clueless on the outside, it was doomed. Why smart people inside the company could not realize it will be studied for decades and will spawn many papers and books.
I talked to someone who was at Motorola when the Kin was out for hardware bid. They repeatedly asked what the strategy was, why was a separate O/S needed, and eventually turned it down.
I believe Panasonic eventually got the bid, but pretty much stole Motorola's design according to my friend.
I've worked on a few projects that seemed extremely stupid at the developer level, but were financially successful (despite being stupid).
Microsoft has a lot of weight so maybe they thought they would have some leverage for a certain demographic. Though they would have had to sell a _lot_ of Kin's to break even on their investment (if rumors around Redmond are true).
My friends on the Kin team seem to have been caught by surprise. Those of us who watched for years from the outside: less so.