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Fire Phone

3D-enabled smartphone
Amazon Cemetery
GENERAL INFORMATION
Category:
Software & Hardware
Started:
2014
BUSINESS FAILURE
Cause:
Poor Product
Closed:
2015

Description

The Fire Phone was announced by Amazon on June 18th, 2014 as a 3D-enabled smartphone. The phone was developed by Amazon and manufactured by Foxconn and was Amazon’s first attempt to penetrate the smartphone market after the amazing success of Kindle Fire.

Amazon made it available for pre-order on the date of the announcement. For US users, the phone would be released in July 2014 as an AT&T exclusive.

One of the major selling points of the phone was a feature called Dynamic Perspective. The feature used four front-facing cameras and a gyroscope to track the movements of users which were then adjusted by the OS to give a 3D impression. Other interesting features of the phone included services by Amazon known as X-Ray, Mayday, and Firefly.

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Cause of Failure

Soon after the release of Fire Phone, the hype around it started dying down. Within just two months of being on the market, Amazon announced that the phone would be available for 99 cents upon signing a two-year contract with AT&T - a sharp contrast to the initial $650 base price and $200 with AT&T contract. 

Amazon had high expectations for the performance of the Fire Phone (probably encouraged by the popularity of its other electronic devices). However, three months after the launch, Amazon had a whopping $83 million in inventory. The industry giant later reported a loss of $170 million in the third quarter of 2014 due to the failure of the Fire Phone.

While there are many reasons why the Amazon Fire phone turned out to be a complete failure, one of the initial ones was its starting price. Judging from the success of Amazon’s Fire tablets in the past, customers expected an affordable but decent phone that could compete with others in the same range. This strategy had worked for Amazon as its tablets provided an inexpensive alternative for Apple’s iPad. Unfortunately, Amazon aimed too high for the Fire Phone and attempted to create a high-end phone initially priced at $650. This made the fire phone yet another overpriced flagship smartphone facing fierce competition from the likes of Apple and Samsung. Despite Amazon lowering both the standard and AT&T contract prices for the phone by November 2014, the phone’s adoption rates remained low.

Apart from the unfeasible price, the Fire Phone’s unique features weren’t a hit either. Features like the 3D functionality and Firefly, which allowed scanning and identification of items, were nothing short of disappointing for the customers who had expected some real utility.

Amazon seemed to have applied the same formula to its phones when it came to the Operating System as it did with its tablets. The Fire OS was a heavily customized Android system without access to major Google applications including Gmail and Maps. The OS was not Google-approved like that of other Android smartphones on the market. What Amazon failed to factor in was the popularity of Android OS and Google apps among mobile users. Had Amazon utilized the Android market share to its advantage, things might have looked quite different.

US customers of the Fire phone were further inconvenienced by Amazon’s deal with AT&T. While Amazon was marketing the device to all Prime customers, the device could only be sold to those who were signed with AT&T. This was an oversight on Amazon’s part as the e-commerce giant didn’t really need the extra retail support and awareness brought by partnering with the carrier. The deal seemed to work against Amazon’s interests and could be one of the reasons for its failure in the US market.

References

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