Xbox 360 Profit Covered KIN's Failure
Microsoft lost at least $240 million on the Kin blunder.
Two weeks ago we reported that Microsoft sold 503 KIN (One and Two) messaging phones in less than two months before the company pulled the plug. Other reports indicated that the final number was less than 10,000, however consumers will likely not ever know the real figures, possibly to prevent further embarrassment on Microsoft's behalf.
But the company did admit in its latest quarterly earnings report that it lost in big numbers--at least $240 million. "[The] cost of revenue increased $240 million or 2-percent, primarily reflecting increased online costs and charges resulting from the discontinuation of the KIN phone," the company said. Apparently the number doesn't include the actual KIN development costs.
So where did Microsoft get the $240 million to bail out the KIN One and Two? From its lucrative Entertainment and Devices division. "[Costs are] offset in part by decreased Xbox 360 console costs and reductions in other costs due to resource management efforts."
This division took a $172 million hit thanks to the KIN phones.
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They should have used that money for fps games that uses Kinect.
i can see it, in 20 yeats this will be like the ET game cartrage and worth alot simply because it was so bad only a few hundred ever escaped and the rest all got trashed .. that is if people start collectiong old cell phones.. i'm sure somebody does/will
That is how MS works though, and it is great. Kin failed, Xbox covered it. But when the Xbox division was losing money every month another division was covering it, allowing it to get where it is today.
LOL no doubt, the KIN phone looks fxxking ugly to me..
and we have tons of Apple fanboy here ~ Oops
Maybe in the future MS will spend the money on free XBL, instead of crappy phones.
$250 mil is pocket change to MS.
I don't think there was anything about the kin phones that was deal-breaking. Sure they had issues, but other phones at the same price point have always had even more glaring issues.
It's nice to compare every low end smartphone to the iPhone or Droid or [insert $500+ phone here] - but it just doesn't work like that.
I think that the problem was lack of advertising - at least where I live (Toronto) - I did not see a single ad for the kin phones. Even if they didn't sell them here, you still usually see american ads on TV.
I don't think there was anything about the kin phones that was deal-breaking. Sure they had issues, but other phones at the same price point have always had even more glaring issues.It's nice to compare every low end smartphone to the iPhone or Droid or [insert $500+ phone here] - but it just doesn't work like that.I think that the problem was lack of advertising - at least where I live (Toronto) - I did not see a single ad for the kin phones. Even if they didn't sell them here, you still usually see american ads on TV.
The problem is that most carriers are going to charge you through the nose for a smartphone, no matter what kind of smartphone it is. Even giving away a phone, compared to spending $200 on an iPhone 4 or android device, is a joke when the monthly bill for the phone is probably close to $100 either way. That $200 is a drop in the bucket of a 2 year contract cost. This has created the situation where anything less than the best is simply passed over.
If Microsoft (or any other handset "maker") were to come up with a phone that would auto-magically use a data gateway for all SMS activity (requiring no txt plan or fees), and use streamlined data interfaces for all social networks to ensure low data usage, they would have a *goldmine*. Offering a phone that acts "smart" without requiring $30-50 more a month for the privilege would be an instant success. Sadly, not too many carriers would be enthusiastic about supporting such a device.
The problem is that most carriers are going to charge you through the nose for a smartphone, no matter what kind of smartphone it is. Even giving away a phone, compared to spending $200 on an iPhone 4 or android device, is a joke when the monthly bill for the phone is probably close to $100 either way. That $200 is a drop in the bucket of a 2 year contract cost. This has created the situation where anything less than the best is simply passed over.
Yeah you're probably right with that.
About the SMS thing, even the locked-tight iPhones already have that, it's just not in the native SMS interface - you have to use an app for it. In fact I even have that app on my 1G ipod touch that I tried out for sh**s and giggles. I'd be very surprised if android didn't have their own version.
As for the social networks streamlining their interface? We can only dream lol...
I thought Game pirates took a lot of MS money LOL. Looks like the R&D in and the portable device departments over there in Redmond should get ban hammer.
Its a shame that it took a large chunk of profit out, but if its for the better of W7P development, it's not a lost cause.
Microsoft is spreading itself too thin with all these devices. How about just focusing on making the best damn OS/software possible.
I bet it still had great reception.
Hate to think my xbox live gold money went to cover this. Can we put the Kin people in a FPS, and shoot at them...Laugh.
Hope they recoup the losses further with Win 7 phones.