Amazon’s unsold Fire Phones are costing it $170 million
During its earnings call yesterday Amazon gave some clues about just how spectacularly its Fire Phone business is tanking — making it seem one of the worst tech ideas since the RMS Titanic shipped without lifeboats.
How bad are we talking? At the end of its disappointing third-quarter the company still has a massive $83 million worth of unsold inventory sitting around.
It’s now taking a $170 million charge “primarily related to Fire phone inventory valuation and supplier commitment costs.”
This isn’t the first bit of bad news for Fire Phone, which has seemingly lurched from disaster to disaster since its debut, like the smartphone version of Frankenstein’s monster.
First of all was the ill-fated decision to not give users access to Google Play, but only to the Amazon Appstore, which has a much smaller app catalog and major titles missing.
Next was the price, which was initially the same as a flagship device like Samsung’s Galaxy S5, despite lacking the same specs. This was cemented when decidedly chilly reviews poured in, describing the Fire Phone as “full of gimmicks, [but] lacking basics” and claiming smartphone owners would be “better off with just about anything else.”
The result was a handset that appeared to have sold less than 35,000 in its first two months — compared to, say, the iPhone 6 and 6 Plus which sold upwards of 10 million devices in their first weekend. A follow-up report from Consumer Intelligence Research Partners claimed that “has achieved virtually zero market share,” and even struggled to get devoted Amazon Prime customers on board.
At present the Fire Phone has been discounted to $0.99 on contract just three months after it first went on sale for $199. The Kindle did, of course, overcome many similar problems in its first incarnation to become a respectable tablet further down the line, but the smartphone space is also a very different (and more crowded) one to the tablet market.
Any bets on if we’ll see a Fire Phone 2?