Poor Fire phone reviews by customers, testers and analysts appear to have taken their toll on sales, leaving $83 million worth of unsold phones at the end of October. The company disclosed at its last earnings call that Amazon had taken a $170 million charge, mostly associated with the Fire phone and related supplier costs.
Fire's innovative features were undervalued by customers and too difficult to market, said Patrick Moorhead, an analyst at Moor Insights & Strategy. There were too few 3D video titles, despite Amazon's promotion of that capability, and Firefly was indeed "intended to help you buy more goods from Amazon, which just wasn't valued," he said.
Removing the older customer reviews, even as Amazon argues that the Fire phone site has been re-launched, "calls into question Amazon's transparency and honesty, which is a shame," Moorhead said. Cloaking bad reviews is, in Amazon's mind, a way to increase the chances of selling the Fire phone, he added.
Part of the drastic 69% price cut in the Fire phone could be due to initial overpricing.
Amazon Senior Vice President of Devices David Limp told Fortune in October that "we didn't get the price right." He said Amazon customers "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."
Limp made that comment before the second price cut was unveiled on Tuesday, so it doesn't explain the latest move other than as a response to more serious sales problems. Amazon was asked to comment, but didn't respond.
Amazon had priced the unlocked version initially at $649, keeping it in line with many top-of-the-line phones.
Limp was also quoted at that time saying Amazon would improve software features in the Fire and offer future releases. Amazon has had a number of device successes, with the Kindle e-reader and its Fire tablets, which would favor future success with the Fire phone.
An Amazon spokeswoman on Wednesday said the new listing of an "unlocked" Fire phone at the lower price corresponds to Amazon's efforts to "listen to customer feedback" about the desire to have it unlocked from any GSM carrier. (However, the previous version of the Web site did include a 32GB unlocked variant.)
It might not be fair to pick too much on the Fire, given heavy competition in the smartphone market -- especially in the U.S.
Analysts believe that many customers held off considering a first-time phone from Amazon because there were so many capable alternatives coming from seasoned veteran manufacturers like Apple and Samsung. The iPhone 6 and iPhone 6 Plus were announced in September, and the Samsung Galaxy S5 had already appeared in April.
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