Don Mattrick, the boss of Microsoft's interactive entertainment business, has reportedly told the New York Times that the company spent hundreds of millions of dollars developing Kinect.
The first Kinect prototype apparently cost $30,000 to build, but with 1,000 workers eventually involved in the project the cost to bring the device to market spiralled, the NYT writes.
MS CEO Steve Ballmer said of Kinect, which launches early next month: "For me it is a big, big deal. There's nothing like it on the market.
"This is an incredibly amazing, wonderful first step toward making interactivity in the living room available to everybody," he added, acknowledging that Microsoft still has "a lot of work to do".