Weak Sales Spur Amazon To Slash Fire Phone Price (AMZN)

Due to the weak initial sales of the device, Amazon has decided to slash the price of the Fire phone to 99 cents with a two-year contract with AT&T, the exclusive carrier for the device. That is a price difference of nearly $200 from the time that the phone was released. Individuals that purchase the Fire phone also get a free year of Amazon Prime, Amazon’s shipping and video club, saving $99 on the cost of the membership.

The release of the Fire phone occurred last June with great fanfare and a dramatic presentation from Jeffrey P. Bezos, Amazon’s founder and chief executive. The creation of the Fire phone was an expensive project, involving four years of work and thousands of employees. Nearly 60,000 people wanted to attend the unveiling event, but the company has not been able to create that same interest in purchasing the phone. The innovative Firefly feature, which identified products and made it easy to order them from Amazon, was not enough to draw in new customers. Neither was the Dynamic Perspective feature, which was designed to enhance maps, shopping and games.

Amazon is basically giving the phones away now to clear its inventory and to get as many people using the Fire phone as they can. Amazon has seen previous success with basically giving away hardware and making up the cost in additional orders from the users. However, history is not on Amazon’s side this time. The same issue of weak sales and slashed prices occurred when Facebook released its phone and, even after the price was slashed, the phones failed to move and never gained a foothold in the market.

When the Fire phone was first released, Amazon expected to sell between one million to two million units over the first year. The estimated sales so far are much lower than that, averaging around 35,000 total units sold. However, learning exactly how many units were sold will be difficult, as Amazon does not release sales numbers for its devices. An AT&T spokesperson has also declined to disclose or estimate how many Fire phones have been sold through AT&T stores.

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