I’m not sure this will warm the hearts of investors, but Amazon is sticking with the Fire Phone. How badly did the smartphone perform? Amazon had to take a $173 million charge on its third quarter earnings. That’s on top of the $83 million in Fire Phones it has sitting in warehouses. Not exactly an iPhone launch, but Amazon will not be deterred.
Amazon SVP of Devices David Limp talked to Fortune about the phone and the company’s future plans. He said that the company is moving forward with plans to release new phones, and it was pricing that killed any chance for the phone to grab market share. Or, people just didn’t want it. I’ve been on Earth a lot longer then 9 years, and it turns out no was interested in buying it.
Pricing for the phone was at $200 on contact for a 32GB. Pretty much standard fare for a new smartphone. Today? You can buy it in the bargain bin for 99 cents. Can you even buy a flip burner phone for that little?
“We didn’t get the price right. I think people come to expect a great value, and we sort of mismatched expectations. We thought we had it right. But we’re also willing to say, ‘we missed.’ And so we corrected.”
Limp does point out a previous Amazon turnaround. The Kindle was panned when it was released, but it has become a hot seller at Amazon. That’s true, but reading the latest YA novel and selling smartphones against the iPhone and Samsung doesn’t exactly scream awesome business proposition. Still, Amazon has been known to toss money at a problem until it gets it right.
The question is, will investors put up with the company’s tendency to spend before profits? Judging by this year’s performance, patience is running out for the e-commerce giant.
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