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Amazon’s Fire Phone Flops and Costs Them

October 23, 2014 - Written By Phil Bourget

Amazon is a company we have associated with many things.  A vast online marketplace, a bookstore that could go with you in a purse or satchel and last for a month, a full-media experience in a comfortable form factor, the convenience of music and video streaming, and expedited shipping.  But one thing Amazon tried to teach us this year is that they should be associated with a great smartphone experience.  But, as many of us guessed, they haven’t exactly had outstanding sales and success with the Amazon Fire Phone.  In fact, we heard a few months ago that AT&T had discounted the Fire Phone from over $100 on a new contract to just a penny, that’s $0.01 folks, to attempt to boost sales.

That didn’t really work.  But, how bad could the failure of the Fire Phone possibly be?  Amazon, with the Fire Phone being its first foray into the smartphone market, probably didn’t make too many and expect to sell out quick like Xiaomi does every time.  Maybe they just have a few hundred laying around, and will have to give up a few thousand dollars to break even or pay their losses.  Let’s stop the guessing and ‘maybe this’-ing now, because CNET shared some news about the failure of the Fire Phone has affected Amazon and their wallet.

The online mogul company has suffered from the lousy sale and popularity of their first smartphone, and their bank account is going to want a huge success to make up for the work it’s going to do.  According to Amazon’s Chief Financial Officer, Tom Szkutak, Amazon had $83 million in devices as of the end of the third quarter of this year. The company will have to pay out a whopping total of $170 million for various things, including international and U.S.-based costs, at $25 million and $62 million respectively. But the worst part is that it couldn’t have been avoided. The smartphone market is filled with, sometimes bloated with, competing devices. And since all Android handset manufacturers produce all year and Apple only releases phones once a year, people are in one of two situations. They are either waiting for the upgrade to their device, Android or iOS, or they are just coming out of a store with a new device, and often a new contract for two years (or less, with today’s plethora of plan-less options).  Amazon chose badly, but it couldn’t avoid it.

The Internet giant tried to enter a market it hadn’t been in before, so that was uphill to say the least. They limited their device’s availability to a single U.S. carrier, AT&T, and had a high price for the device without AT&T’s connection ($700, to be exact). And they entered over the summer, when people are just getting and loving their new Android devices, and/or holding tight for the devices that will inevitably come in the fall. The plight of Amazon is sad, but completely real. A failed product, whose lack of success can be blamed on a multitude of factors and choices, is always sad to see as someone who loves technology and seeing companies knock it out of the park with new and unique ideas. Did you or someone you know buy a Fire Phone? What was the initial impression of the Fire Phone, and do you think it colored how people received it as a new product?  What things could Amazon have done to better lace their shoes to kick a goal instead of a foul?  Let us know down below.