First results from a high-resolution three-dimensional nonlinear numerical study of the kink oscillation are presented. We show in detail the development of a shear instability in an untwisted line-tied magnetic flux tube. The instability produces significant deformations of the tube boundary. An extended transition layer may naturally evolve as a result of the shear instability at a sharp transition between the flux tube and the external medium. We also discuss the possible effects of the instability on the process of resonant absorption when an inhomogeneous layer is included in the model. One of the implications of these results is that the azimuthal component of the magnetic field of a stable flux tube in the solar corona, needed to prevent the shear instability, is probably constrained to be in a very specific range.