First of all, you needed to have ample space between yourself and the Kinect (not ideal for small apartments, dorms, bedrooms, or any small-ish room in general). Unlike the motion tracking systems of that time, which included the Wii and PlayStation Move controllers, the Kinect did not require any device in the users' hands and would track the entire person using multiple cameras and sensors.
After years of floundering sales and unannounced games, Microsoft has finally chose to kill off the Kinect. Pressure from the gaming community and competition from its chief rival, Sony (which had its own console, the PS4, coming to market), forced Microsoft to eventually decouple Kinect and Xbox One. The device downfall was attributed to the uncertainty over game support for the device and unwillingness of lot of franchises to not developing big budget games for Kinect.
It's now rumored that Microsoft will continue to support the device for current users, but the extent of that support - especially as it relates to development tools - is unknown at this time. The fact Xbox One S and Xbox One X do not have dedicated Kinect ports speaks volumes.
In May 2014, Microsoft announced that Kinect would no longer be included in Xbox One packages, dropping its price by $100 as a result. According to new reports, production on Kinect cameras has come to a halt, bringing the slow death of the peripheral to an anti-climatic end.
Currently, Microsoft is working on the Hololens; a mixed reality headset with AR and VR capabilities.
In a lengthy interview with Fast Company this Wednesday, the creator of Kinect said Microsoft was shutting down all manufacturing of the input device.
Despite all the spying and privacy concerns, Kinect had an opportunity to become something great, but Microsoft forfeited that by not committing to it.