Microsoft’s failed Kin phone project has cost the company around US$240 million, according to a note in its latest earnings report released yesterday. For the twelve months ended June 30, 2010, Microsoft said its “cost of revenue increased US$240 million, or 2 percent, primarily reflecting increased online costs and charges resulting from the discontinuation of the Kin phone, offset in part by decreased Xbox 360 console costs and reductions in other costs due to resource management efforts.” Earlier this month the company announced it is to axe its Kin family of mobile phones aimed at young, social networking consumers, less than three months after unveiling the products. Poor sales are believed to have been blamed for the decision. Following a launch of the two devices via US operator Verizon Wireless in May, the plan was for Vodafone to sell the portfolio in Europe this autumn. That plan has now been shelved.
On a brighter note, Microsoft beat analyst estimates with a record fourth quarter. Revenues were up 22 percent to US$16.04 billion whilst net income grew 48 percent year-on-year to US$4.52 billion. In an interview with the Wall Street Journal focused on the results, Microsoft CFO Peter Klein touched on the company’s ongoing efforts surrounding the launch of its Windows Phone 7 platform, due later this year and deemed crucial to the company’s chances of being a long-term major player in the mobile space. “We’re very aware of how important it is to do well on Windows Phone,” Mr. Klein said. To that end, reports this week state that every Microsoft employee – around 90,000 – will receive a free Windows Phone 7 device, whilst the company is also reportedly encouraging its employees to develop apps for the platform.