By loading up the Fire Phone with novel features and closely integrating Amazon content the company thought it would have another hardware hit on its hands. According to a preliminary analysis, however, the Fire Phone is a flop.
Using Chitika and comScore data The Guardian estimates that the company has sold well less than 50,000 phones since its introduction earlier this summer. Chitika tries to be generous, characterizing the handset’s traffic growth as steady if slow and attributing the Fire Phone’s weakness in part to “carrier exclusivity” (AT&T):
Both the Fire Phone and Droid Ultra charted relatively similar growth rates following their respective launches, with the latter experiencing a slightly steeper rise. In this context, the somewhat mild adoption of the Fire Phone may be seen as an expected consequence given the smartphone’s carrier exclusivity.
Yet the handset received mixed reviews and was overpriced for what it is. Fire Phone 1.0 is a failure. The question is: what will Bezos and company do to revive the device? Aggressive discounting in one viable answer.
The phone currently costs $199 with a two-year contract and $650 unlocked. That’s iPhone-like pricing.
The current pricing was a huge miscalculation by Amazon and a function of considerable hubris. Fire Phone should cost something more like the Moto G ($179 without a contract). However the device at that price point would be sold at a considerable loss.
Third party estimates put Amazon Prime members at around 30 million. That is probably the “addressable market” for the current Fire Phone. But if the above sales estimates are accurate the company will have to radically rethink its smartphone strategy.
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