Fire Phone flop – Amazon takes $170m charge on its smartphone

Fire Phone flop – Amazon takes $170 million charge on its smartphone

By Trevor Mogg October 24, 2014

5 ways Fire Phone — Image used with permission by copyright holder

When Amazon’s first ever smartphone landed back in July, it raised a lot of eyebrows. Bereft of high-end specs and with a price tag that made you think it really should have lots of them, the Fire Phone failed to capture the imagination of consumers.

Proof of this came on Thursday when the e-commerce giant released its Q3 data. In an earnings conference call with investors, CFO Tom Szkutak revealed the company has taken a $170 million write-down primarily related to unsold Fire Phones.

He added that Amazon had $83 million worth of Fire Phone inventory at the end of September.

It’s grim news for the Seattle-based firm, though not altogether unexpected. Reviews for the device in the tech press have been far from stellar, and its price at launch was way beyond what most people had been expecting and were prepared to pay. Making it an AT&T exclusive also hasn’t helped its cause.

Amazon doesn’t reveal specific numbers for sales of its mobile devices, which, in the case of its smartphone, is just as well. However, that doesn’t stop analysts making estimates using available data, with some putting Fire Phone sales at a measly 35,000 units in its first 25 days of availability. At the other end of the scale, Apple says it took 10 million pre-orders for its new iPhone handsets during their first weekend of availability last month.

Further indications that the Fire Phone was struggling came just six weeks after the handset was announced, when its price was slashed from $200 to just $1 on-contract. And just this week, it’s started offering a Kindle Fire tablet with a Fire Phone purchase. The phone, which gets two out of five stars from customer reviews on its own website, has also slipped out of the company’s top 100 chart showing its best-selling electronics items.

Amazon touted the phone for its ‘Dynamic Perspective’ feature that uses an array of sensors to offer users a realistic 3D viewing experience, something DT’s mobile expert Jeffrey Van Camp described as “gimmicky but fun” in his in-depth review. Its Firefly feature, which recognizes millions of objects enabling easy purchase via its online store, was also heavily publicized, but consumers are clearly having none of it.

While no one is betting on Amazon ever becoming a major player in the smartphone market, launching a heavily upgraded handset with a reasonable price tag could at least help it to avoid another Fire Phone flop.

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