Amazon executives now admit that they had the pricing wrong when they launched their first smartphone, the Fire Phone. When the device first came out it was retailing for $199 on contract and $699 unlocked. A month later, without any warning, Amazon dropped the price to a paltry .99 for the AT&T version. Speaking to Fortune, Amazon’s senior vice president of devices David Limp now says the company simply whiffed on the pricing. “We didn’t get the price right,” Limp said. “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.”
The correction as Amazon puts it resulted in a company wide $544 million dollar loss last quarter and they are sitting on $83 million dollars worth of unsold phones going into the lucrative holiday season.
The Fire phone was designed to always be in your pocket and assist in purchasing things from Amazon. Likely we are all aware now of stores disdain of the show room concept, where people visit retail and just buy it online for cheaper. Amazon adopted Firefly technology that would scan bar codes and UPC labels and automatically give you the best price.
One of the barriers that prevent mass adoption is that the phone is only officially available in the US and UK, two markets that are saturated. If you buy the locked version, AT&T simply won’t unlock it for you if you say live in Canada, like we do.