In October, Amazon Senior Vice President of Devices David Limp told Fortune that "we didn't get the price right" when the Fire was first introduced at $649. "And so we corrected."
But there were still $83 million worth of unsold Fire phones at the end of October, and Amazon disclosed during its last earnings call that it took a $170 million charge, mostly associated with the Fire phone and related supplier costs.
All that happened well before the discount to $199 on Nov. 25. Analysts said the September and November discounts were intended not only to reduce unsold inventory, but also to make way for a newer version of the Fire Phone.
A new Fire 4.0 Fire early next year
Amazon has said a new version of the Fire is on the way that moves the phone from Fire OS 3.x to 4.0 ("Sangria") early next year, according to an Amazon statement in September. The Fire OS is an Android variant.
Gold said the Fire discounts are intended to sell more of the old phones while a new version is in the works. "Getting rid of older inventory is important," he noted.
The unlocked version that went on sale for $199 has some revisions over the original device, including text translation, a secure corporate VPN and user interface and performance improvements. All of those added features will be rolled out to Fire customers over the air in coming weeks.
Customer review dust-up
Some Computerworld readers, Fire customers and analysts have argued that Amazon created a new web page for the $199 discounted unlocked Fire phone partly to obscure negative customer reviews seen on the earlier Web page for the locked AT&T version.
In the world of product marketing, unpopular products and even entire businesses get renamed or rebranded to help boost sales.
Some have called what Amazon has done with its Fire phone unlocked discount a manipulation of customers, but it does seem to follow a pattern with other devices sold on the Amazon site.
In the case of the Fire phone, there is the newer unlocked Web site, selling it temporarily on $199 discount. It includes more than 250 customer reviews from its first week of sales, many from customers praising the low $199 price. The average review is 3.9 out of 5 stars.
Amazon has also continued selling, on a separate web page, the original locked version that includes 3,897 customer reviews with an average of 2.4 out of 5 stars.
To its credit, Amazon has a long tradition of allowing customers to say what they want in their reviews, even damaging and negative comments. Other examples of Amazon selling both locked and unlocked versions of smartphones on separate web pages include the Galaxy S5 locked through Verizon as well as one unlocked version. There is also a locked HTC One M8 web page and one for an unlocked version.
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