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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.

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TheGreatFilter October 31, 2014 um 1:46 pm

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

Nate Hoffelder October 31, 2014 um 2:10 pm

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

AvidReader October 31, 2014 um 3:00 pm

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.

Nate Hoffelder October 31, 2014 um 3:22 pm

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.

ucfgrad93 October 31, 2014 um 3:28 pm

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.

tubemonkey October 31, 2014 um 3:40 pm

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.

Nate Hoffelder October 31, 2014 um 4:18 pm

Amazon sells the unlocked version for $649.

tubemonkey October 31, 2014 um 4:32 pm

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.

Nate Hoffelder October 31, 2014 um 4:43 pm

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.

Juli Monroe October 31, 2014 um 4:41 pm

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

DaveMich October 31, 2014 um 5:39 pm

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.

Nate Hoffelder November 1, 2014 um 7:05 pm

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.

Gary October 31, 2014 um 9:13 pm

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.


Nate Hoffelder October 31, 2014 um 10:50 pm

Yep. That’s a typo.

CJ November 2, 2014 um 6:09 pm

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

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