Amazon isn’t a company that is used to failing in spectacular fashion. It’s the largest retailer in the world. It has a healthy digital marketplace for music and videos. It sells a best-in-class e-reading device. And its Kindle Fire tablets have found a decent audience.
But its Fire Phone has been, thus far, a disaster. And now an Amazon VP is pretty much confirming it as such.
Vice President of Devices David Limp granted an interview to Fortune; in it, he admitted that the company “didn’t get the price right” for the Fire Phone, and “mismatched expectations” in terms of the value consumers hoped to receive from the device.
The correction Limp speaks of happened shortly after the Fire Phone launched. When it became clear the device wasn’t selling at $199, Amazon drastically cut its price down to 99 cents on a two-year contract. But even with that discount, Amazon wound up having to write down $170 million on the Fire Phone. And, in warehouses around the country, approximately $83 million worth of unsold Fire Phones are sitting, gathering dust.
That’s a lot of unsold inventory.
Still, Limp isn’t saying Amazon was wrong to dip its toe into the smartphone waters. An excerpt from the Fortune interview makes that clear.
“When you’re taking risks, they’re not all going to pay off,” said Limp. “Those are the facts.” Limp pointed out other Amazon devices, like its Fire tablet line and Fire TV streaming box, that he described as being “very successful” with customers, but he declined to discuss sales numbers.
So the Amazon Fire Phone was a risk that didn’t pay off. But will Amazon tweak its approach and try once more to make a dent in the smartphone market? Or is the company going to cede that crowded category and focus elsewhere?
Let us know what you think.