Amazon CEO confidently strolled onto the stage on June 18, and introduced the world to Amazon’s first-ever smartphone — the fire Phone. The fire Phone shipped with a few novel ideas, such as tangle free earphones (that’s the claim), a 3D display, and an easy way to channel any online purchase right into Amazon.com. Then came the fire Phone reviews — and they were not pretty. Next came the actual product launch, and sales have equaled or fallen even shorter than the poor reviews it had been given. Amazon’s fire Phone is already in massive trouble, which seems more than strange, given it is the latest in a line of never-ending Android smartphone launches. Why would fire Phone fail to do well within the large Android crowd?
Amazon launched fire Phone exclusively with AT&T wireless. Amazon targeted its launch at millions of iPhone owners currently on month-to-month payment plans or iPhone owners whose two-year commitments were and/or are about to expire ahead of iPhone 6’s launch. This would appear to be a perfect time for Amazon to swoop in and steal away iPhone sales, converting a healthy dose of AT&T customers to fire Phone. But either Amazon executives ignored, or did not believe one major piece of data – iPhone loyalty figures hover around 90%. The idea that Amazon could somehow deflate that figure by converting iPhone users who are no doubt waiting for iPhone 6/air to launch is a bold miscalculation. AT&T is struggling to sell the fire Phone to anyone, let alone loyal iPhone users who are, in, out, or nearly out of contract.
Amazon’s second blunder was believing they could sell the fire Phone at the exact same price as the iPhone 5S, starting at $199. The high-end smartphone market is a tough club to join, and consumers in this space have settled on two solutions consisting of iPhones or Samsung's high-end Galaxy lineup. Amazon should have noticed that over the past several years, Motorola Mobility, HTC, LG, Google or Microsoft/Nokia failed to break into this high-end market space with any success.
Bezo has pressure to start producing profits at Amazon, and fire Phone’s pricing may have evolved into a high-end solution to satisfy the board. That said, it was the wrong move, as Android users are the only valid target for Amazon’s smartphone. Unfortunately for Amazon, the Samsung Galaxy S5 has been in the market for nearly five months now, and has taken most of the high-end Android sales opportunity off the market.
Amazon may have been successful with the Kindle line of tablets, but extremely low price points gave them sales momentum. Amazon is not following the low end tablet market with a low-end phone and the marketing failures — from price to targeting iPhone users — are going to lead to a quick exit.
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