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Xbox 360 Profit Covered KIN's Failure

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.