Amazon Fire Phone Sales Disappoint, Lead to $170 Million Deficit
The highly anticipated Amazon Fire phone did not live up to the hype, and the e-commerce giant is already reporting major losses from their debut smartphone product.
After only four months, Amazon's "breakthrough" device is being sold for 99 cents with a phone contract.
The flop was first revealed in Amazon's quarterly earnings released Thursday, with a $170 million deficit for "inventory evaluation and supplier commitment costs" for the Fire. According to The Associated Press, the company reported it still had $83 million worth of phone inventory left over at the end of Q3.
Principal technology analyst at Moor Insights and Strategy, Patrick Moorhead, said to ABC News that Amazon's Fire phone was a "brand mismatch" among smartphone users who shopped on Amazon's website.
"I think that Amazon was more interested in monetizing its buyers than actually delivering a compelling experience," Moorhead said.
Technological innovations like the 3-D display, which was ideal for game play, and the ability to identify almost any item and take the user to an online sale, were pioneering features. But Moorhead said the phone's technology was not implemented on the correct device.
"I could imagine on a 10-inch tablet playing some really cool 3-D games, but their display was too small," Moorhead said. "It was the wrong platform."
Amazon's chief financial officer, Thomas Szkutak, said the company will be "selective" about its next steps on future projects.
"We certainly have been in several years now of what I will call in investment mode," Szkutak said. "There's still lots of opportunity in front of us, but we know that we have to be very selective about which opportunities we pursue."
Even with this immense loss over their smartphone endeavors, Amazon reported a 20 percent overall revenue increase to $20.6 billion, which still fell short of analysts' predictions.
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