Verizon and Cingular have both discontinued the sale of their feature-limited cell phones targeted at children. (See RCR Wireless story.)
This doesn't mean that things aren't going well with younger children. It's just good business sense. The challenge with the phones is that they serve a niche market just like phones at the high end ($400+) which are also sold elsewhere (e.g., Nokia's flagship store on 57th in NYC). It's a niche market because the majority of parents we've surveyed with children under the age of nine years simple feel their child is too young for a cell phone of any kind. The tween market will be hot in 2007 according to our data, but once these kids hit late grade school years/junior high, they want the real deal as Verizon found out.
I have a report to be published early next month on selling cell phones to second graders that will explore this topic in depth.
Niche products have the challenge of inventory costs, fighting for limited shelf space, educating sales staff on a product they won't be selling often, etc. The kid products have the added challenge that they don't typically generate high ARPU contracts as they are prepaid or add-on's to their parents' contracts.
Kids and their parents are much more likely to be in grocery stores, Walmart, Target, etc.
I did a blog on the Migo a while back. It's a bit sad it's gone.