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Amazon Fire Phone fizzles: retailer writes off $83 million of unsold smartphone inventory

The company's stocks took a dive after a disappointing earning's call

James Vincent
Friday 24 October 2014 21:46 BST
Jeff Bezos poses next to Fire phone
Jeff Bezos poses next to Fire phone (AP)

Reviewers were far from kind to Amazon’s Fire Phone, the company’s first ever smartphone, and it seems that customers took the hint.

In this week’s earnings call the company announced that it was writing off $83 million of Fire Phone inventory (out of a $170m write-down “primarily related” to overestimating the devices popularity).

It’s not clear exactly what this figure means in terms of numbers of units but – as The Guardian’s Charles Arthur suggests – we can estimate that Amazon was expecting $400 in revenue from the $600 pricetag (this puts the costs and labour price of the Fire Phone at the same as that of the iPhone 6: $200) meaning that they likely have in excess of 200,000 unsold devices.

So what went wrong for the Fire Phone?

The Fire Phone promised a 3D display and an intuitive user interface. Customers were disappointed.

Well, while reviewers agreed that it was a solidly, even appealingly built device, it seems the price was simply too much to ask for a smartphone with mid-range specs and none of the cult appeal of an iPhone.

In addition, Amazon attempted to hype up its ‘3D’ interface (really just head tracking technology that moved the screen’s background as the user moved their head) when really the phone’s only unique feature was a tie-in with Amazon prime, the company premium membership service.

Analysts had been expecting the company to go for low prices to drag customers further into the tangle of the Amazon ecosystem (this strategy worked wonders for its Fire tablet range) but instead it seems Jeff Bezos and his team might have believed a little too fervently in the company’s strength as a standalone hardware manufacturer.

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