Another fire sale for the Fire Phone.
For today only, Amazon is cutting the price of the 32 GB device to $159, which essentially makes the phone $60 because it comes with a free year of Amazon Prime (a value of $99).
The device works on either AT&T or T-Mobile in the U.S. and doesn’t require a contract. At this price the phone is the cheapest it has ever been. In January, the company marked down the phone to $189 without a contract, but in recent months, it returned to its regular price of $449.
When it was first announced a year ago, it cost $199 with a two-year AT&T service agreement, and $649 without a contract. Later, Amazon experimented with dropping the price of the Fire Phone to 99 cents with a two year wireless contract on AT&T.
But we’ve long argued that the phone wasn’t going to sell at any price.
At the phone’s launch event, the Seattle retailer proudly showed off the phone’s magic tricks, bragging how you can navigate through services on the phone using dynamic perspective technology, and how a service, called Firefly, allows you quickly find and identify books, DVDs, songs, phone numbers, art and much more. But what the e-commerce company turned hardware-maker stopped short of disrupting is what really sucks about mobile phones: The bill.
Over the past two years, we’ve seen how T-Mobile has turned itself around by making somewhat small tweaks to how we shop and pay for phones and cellular plans. To be more successful, Amazon should have borrowed a page from the Un-carrier’s book if it really wants to become a dominate player in the mobile industry.
The mistake was a costly one. In October, Amazon took a $170 million charge because of the Fire Phone and said it had roughly $83 million worth of inventory on hand at the end of the third quarter.
For kicks, lets try to back out the numbers. Let’s assume the inventory is based on the full original retail cost of $649 (which it probably isn’t, but we’ll be generous). At the end of the third quarter, that means it still had close to 128,000 phones to sell. Nine months later, it’s still working on it.
Despite the Fire flop, Amazon does have a good reputation as a hardware maker. It’s Kindles are some of the best-selling e-readers in the market, and it’s even done well with more experimental items, like the Amazon Echo, a voice-activated speaker, which was in high demand during a beta period and goes on sale more broadly next week for $179 (but doesn’t come with a free year of Prime).
