Breaking News: Amazon Attributes Poor Fire Phone Sales to High Price

The hot tech news story this morning comes from Fortune, which reported that Amazon has figured out why they've sold so few Fire Phones.

Fortune interviewed  Amazon Senior Vice President of Devices David Limp, who shared the shocking that Amazon may have made a mistake with the price of the Fire Phone:

"We didn’t get the price right," Limp admitted. "I think people come to expect a great value, and we sort of mismatched expectations. We thought we had it right. But we’re also willing to say, ‘we missed.’ And so we corrected."

After debuting with a retail of $649 and an AT&T subsidized price of $199, the Fire Phone's subsidized price was dropped to under a dollar (and a retail price of $449). That hasn't done much to boost sales, or so a market survey of Amazon Prime members suggests.

Amazon has admitted to sitting on $83 million in Fire Phone stock at the end of the 3rd quarter as well as taking a $170 million loss on the phone in that quarter, but that hasn't quelled their interest in smartphones.

"We are going to keep iterating software features to get it better and better," said Limp. "Each release that we’re doing, we’re learning. Beyond that, I leave it out there to see what people think."

Amazon has a history of putting out cheap but adequate hardware in order to get customers to use their other services (digital music, book, movie, and app stores), so much so that I was surprised first by the specs and cameras and then by the high price and AT&T exclusive. Neither decision follows from Amazon's past product decisions, so perhaps if Amazon corrects those two missteps they could sell more phones.

Nate Hoffelder

View posts by Nate Hoffelder
Nate Hoffelder is the founder and editor of The Digital Reader: He's here to chew bubble gum and fix broken websites, and he is all out of bubble gum. He has been blogging about indie authors since 2010 while learning new tech skills at the drop of a hat. He fixes author sites, and shares what he learns on The Digital Reader's blog. In his spare time, he fosters dogs for A Forever Home, a local rescue group.

16 Comments

  1. TheGreatFilter31 October, 2014

    No shit, Sherlock? (I don’t mean you). Seriously, it’s hard to believe these people get paid. Is Amazon losing it?

    Reply
    1. Nate Hoffelder31 October, 2014

      Agreed. That is why I snarked on the story. I’m poking fun at Fortune and everyone else who posted this story.

      Reply
      1. AvidReader31 October, 2014

        It wasn’t just the price but also locking it into AT&T made little sense. On the other hand, I’d love to know how many Fire sticks they sold earlier this week.

        Reply
        1. Nate Hoffelder31 October, 2014

          I don’t know how many have been sold but it’s back ordered to 15 January.

          I would estimate sales at somewhat more than a million.

          Reply
        2. ucfgrad9331 October, 2014

          I bought one. Delivery date of December 2nd. It is my first venture into this type of device. But for $20, I figured it is worth a shot.

          Reply
  2. tubemonkey31 October, 2014

    How obligated is Amazon to AT&T in terms of exclusivity?

    This phone can be “saved” by unlocking it and lowering the unlocked price another $100-$200. Then let consumers take it to the compatible carrier of their choice.

    Reply
    1. Nate Hoffelder31 October, 2014

      Amazon sells the unlocked version for $649.

      Reply
      1. tubemonkey31 October, 2014

        It’s priced at $449 and $549; and that’s too expensive. This phone has specs similar to the Nexus 5 ($349 and $399) and a bit less than the OnePlus One ($299 and $349). A further price cut is warranted if they want to sell it.

        Additionally, it needs to be unlocked so it can used with other compatible carriers. The so-called “unlocked” price is actually a “without a service plan” price. The phone is still locked to AT&T.

        Reply
        1. Nate Hoffelder31 October, 2014

          Huh. So Amazon knocked the retail price down a couple hundred dollars. I thought that was just the subsidized price.

          Yes, the retail needs to drop to $250 before the Fire Phone will ship.

          Reply
  3. Juli Monroe31 October, 2014

    The story was no shocker to me. However, the public admission that they screwed up was, in my opinion, mildly newsworthy.

    Reply
  4. DaveMich31 October, 2014

    They should have just turned their new 6″ tablet into a phone. It couldn’t have cost that much more to do so, and convergence is taking us there anyway.

    Reply
    1. Nate Hoffelder1 November, 2014

      Well, it would probably have added $100 to the cost. But even if the retail price doubled I still think they should have offered the option.

      Reply
  5. Gary31 October, 2014

    I think that there must be a typo in your original story. Quote: After debuting with a retail of $49 and an AT&T subsidized price of $199, unquote.

    $49?

    Reply
    1. Nate Hoffelder31 October, 2014

      Yep. That’s a typo.

      Reply
  6. CJ2 November, 2014

    Without Google Services I believe this phone will continue to sell poorly, at any price.

    Reply
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