Back in June I was dubious about the prospects for Amazon’s Fire Phone.
Amazon could have chosen to be genuinely competitive on price, but instead elected to position its smart phone in line with the high end of the market. Personally, I think that was a serious mistake. It’s just another ‘gee-whiz’ device in a market filled with them – or, at least, the promise of them (many don’t live up to the hype).
. . .
I find this launch more puzzling than exciting. Why did Amazon choose to go this route instead of a more consumer-friendly option? That’s not what I expected from the company, and I’m not sure they made the right decision. I’m a pretty loyal Amazon customer, spending thousands of dollars a year there, but this is one product I won’t be buying in its present form or at its present price.
There’s more at the link.
It seems I was right about the market response. The Digital Reader reports:
Amazon Chief Financial Officer Tom Szkutak disclosed on Thursday that Amazon had taken a $170 million write down in the third quarter largely related to their unsold stockpile of Fire smartphones as well as supplier commitment costs. The retailer is sitting on $83 million in unsold Fire Phone stock, which means that it is actually possible that Amazon is sitting on more unsold units than they have managed to sell in the past 4 months.
Again, more at the link.
That writedown comprises over a third of Amazon’s loss for the last quarter. I fear the Fire Phone was an expensive miscalculation. Now, if the company has the sense to relaunch it as something more consumer-friendly, to compete price-wise with prepaid cellphone networks (see this PC Magazine article for more information), I think it might have a winner on its hands. However, it’ll have to absorb the loss for its high-end phone product, so I’m not sure it’ll want to take a second gamble in that market. I guess we’ll see . . .