updated 07:00 pm EDT, Thu July 22, 2010
MS confirms Kin cost quarter billion dollars
Microsoft while discussing its spring performance acknowledged that the failure of the Kin phones was one of its most expensive missteps to date. It explained that writing off the project cost $240 million even without the development costs. The ending costs led the Entertainment and Devices group to a $172 million loss despite the success of the Xbox and helped the 23 percent increase in Microsoft's cost of revenue.
Kin has already been considered one of Microsoft's greater blunders as it represented both the internal problems endemic to its current structure and its increasing difficulties translating its clout into successful products. The project was originally intended to use the direct results of the $500 million buyout of Sidekick creator Danger, but a decision to force the use of Windows CE delayed the Kin phones by as much as 18 months and not only left it without third-party apps or a calendar but killed an all-important Verizon rate deal that would have made it competitive. Due to the bandwidth needed by the Kin Studio backup and sharing service, Verizon later insisted the Kin would need at least a $70 smartphone plan, handing sales over to Android, BlackBerry and Palm devices with superior features.
Microsoft also orchestrated an elaborate launch that included a special press event and a broad marketing campaign across TV and other formats. The high profile did little to persuade buyers and saw just 9,705 sales in total. Verizon was disappointed enough with sales that it returned unsold stock after just two weeks rather than try to sell what was left.