When Amazon released its Q3 earnings report last week, we got a glimpse its how poorly its new Fire Phone has performed in the marketplace. The company took a $170 million charge that was directly related to “Fire phone inventory valuation and supplier commitment costs.”
It was later revealed that Amazon was sitting on $83 million in unsold Fire Phone inventory; this despite the fact that the online retail giant dropped the price to as low as 99 cents on contract.
This week, Amazon’s Senior VP of Devices, David Limp, is offering a little bit of humility with regards to Fire Phone sales, stating, “We didn’t get the price right.”
“I think people come to expect a great value, and we sort of mismatched expectations, Limp added. “We thought we had it right. But we’re also willing to say, ‘we missed.’ And so we corrected.”
Although Limp makes it seem as though price was the death knell for the Fire Phone, it should be noted that the actual device wasn’t that appealing to customers. First of all, it was an AT&T exclusive device, which turned off a lot of customers. Secondly, its 3D interface was seen as gimmicky by many people, and added little to the functionality of the device. Other knocks against the device included specs that didn’t match the competition, and Amazon’s Fire OS, which doesn’t support core Google apps like YouTube and Google Maps.
In the end, most customers have written off the device and we would have expected Amazon to just let the phone die in peace. However, Limp says that Amazon remains committed to the product, adding, “We are going to keep iterating software features to get it better and better. Each release that we’re doing, we’re learning. Beyond that, I leave it out there to see what people think.”
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