Microsoft while discussing its spring performance acknowledged that the failure of the Kin phones was one of its most expensive mistakes to date. The writing off the project is costing at least $240 million. That is wothout the development cost in the mix. The Kin 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.
The Kin 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, a calendar or Xbox live tie-in app.
Due to the bandwidth needed by the Kin Studio backup and sharing service, Verizon insisted the Kin would need at least a $70 smartphone plan, so sans an app store and to costly of a data plan sales went to Android, BlackBerry and Palm devices.
Microsoft also orchestrated an large and 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 less than 10,000 total sales. Verizon was disappointed enough with sales that it returned unsold stock after just two weeks rather than try to sell what was left
