Axed Kin phone cost Microsoft $240 million, maybe more

The Microsoft Kin was to be the company’s last high-profile mobile market push before the anticipated launch of Windows Phone 7. However, the social-orientated handset aimed at teens sold poorly, somewhere in the region of a mere 10,000 units, causing Microsoft to pull the plug just two months after going on sale. According to Microsoft’s annual earnings reports, its left quite a dent in the company coffers too.

“[The] cost of revenue increased $240 million or 2%, primarily reflecting increased online costs and charges resulting from the discontinuation of the KIN phone,” Microsoft details.

While the $240 stated there is tied directly to the development of the Kin, it doesn’t take into account Microsoft’s acquisition of Danger, the company who designed the Sidekick handset and who worked on the Kin. You could realistically factor in some of the $500 million cost of that buyout too into the Kin’s overall cost to Microsoft.

Good work in Microsoft’s Xbox 360 division seems to have weathered the storm of the Kin’s disappointing performance.

“[Costs were] offset in part by decreased Xbox 360 console costs and reductions in other costs due to resource management efforts.”

Microsoft can breath a sigh of relief when it comes to their Windows 7 operating system however. Despite the Kin’s lack of sales, they’ve still been able to report their best quarter of all time thanks to the continued success of the OS.