Amazon Admits they Got the Price Wrong with Fire Phone

The Fire Phone is not doing well, in fact, it is costing Amazon $170 million in operating loss quarterly. In the recent Q3 earnings call, Amazon announced a loss of $544 million, and the majority of the loss came from their first smartphone. Amazon has been hampered by the lack of popularity for the Fire Phone, despite a lot of interest centered around the 3D display technology and Firefly service. It appears the shiny products are not enough to make a customer go out and buy the device, however. Warehouses are overstocked with Fire Phone, Amazon revealed they have $84 million of Fire Phone in warehouses around the globe. It is unlikely Amazon will sell all of them, and it might go to a bargain sale, in order to cut warehouse losses.

AT&T already dropped the price of the Fire Phone from $199 on contract to zero-down on a two year contract. 02 and Vodafone in the UK have done the same, lowering the entry price for the phone, to make it more competitive in the market. Amazon agrees the start price was wrong for the Fire Phone, Head of Devices David Limp claimed they “got the price wrong with the Fire Phone” and will look to amend this in future updates – meaning there could be a successor to the Fire Phone.

Admittedly, the price is one factor why the Fire Phone failed to sell, but it might not be the biggest reason. Amazon also ships a forked version of Android, which offers a limited selection of apps, compared to stock Android or Apple’s iOS store. This, combined with the Fire Phone essentially being a marketing window for Amazon, has made the phone look like more of an interesting thing to look at, rather than a daily driver for two years of your life. Amazon might be able to fix this with the Fire Phone 2. They could update the internals, add a new version of Fire OS with more emphasis on productivity and services and drop the price, but even then the damage might already be done.

Niche smartphones, for the most part, do not work on a large scale. The Facebook Phone by HTC failed, the BlackPhone to combat the NSA has failed and any other device that offers a main feature, which is out of the ordinary, normally ends up as a failure.