We already knew the Fire Phone was a flop — but exactly how damaging has it been for Amazon? Well, the retail giant is currently sitting on around $83 million worth of Fire Phone handsets it cannot sell, and it’s just taken a whopping $170 million writedown.
Amazon CEO Jeff Bezos confirmed the hit during the company’s earnings call on Thursday. Bezos also admitted that Amazon had vastly overestimated Fire Phone demand by ordering far too much inventory, and making promises to suppliers that it could not keep.
As a result, thousands of Fire Phone handsets worth $83 million are now sat in an Amazon warehouse somewhere because no one wants them. And that’s after the device was reduced from $199 to just $0.99 on contract.
Back in August, it was estimated that just 35,000 Fire Phone handsets had been sold during its first 30 days of availability. Compare that to a device like the iPhone, which sold 10 million units during its first three days on sale, and it’s easy to see why Amazon has a problem. But where did it all go wrong?
It’s clear the Fire Phone was just too expensive initially. Amazon was asking customers to pay the same price as they would for a Galaxy S5 or an HTC One M8 on contract, and yet the Fire Phone couldn’t compete in specifications. Many also felt its 3D features were little more than a gimmick — and then there’s the app problem.
Unlike most other Android-powered devices, the Fire Phone does not have access to Google Play. Users must buy all their apps from the Amazon Appstore, and it has a significantly smaller library, with many big-name titles still missing.
It’s seems unlikely at this point that we’ll ever see a Fire Phone 2, but if Amazon does decide to take a second stab at the smartphone market, you can probably expect a significantly cheaper device that may even be sold at a small loss, with the hope of making up the cash through Prime subscriptions and Amazon sales.