Amazon Takes Major Hit With Flop of the Fire Phone

Amazon Takes Major Hit With Flop of the Fire Phone

Amanda Prescott

Contributing Writer

amanda42@umbc.edu

 Amazon’s smart phone, the Fire Phone, is a complete flop in it’s attempt to compete with other smartphone manufacturers.

In July, Amazon released their first smartphone known as the Fire Phone. The Fire Phone is equipped with new features not offered by any other smartphone competitors, namely Samsung and Apple.

However, the release of the Fire Phone flopped miserably, leaving the Amazon corporation baffled by the results.

A main feature of the Fire Phone was the new Firefly technology that allows the user to identify books, movies, games, QR codes and barcodes within seconds.

However, Amazon has been heavily criticized for Firefly because the scanner technology is only compatible with Amazon’s website, and it cannot be used for other sites.

Essentially, the Fire Phone is based solely around features associated only with Amazon platforms, presenting a major problem for consumers who enjoy using a variety of applications.

Another key feature offered by the Fire Phone is Dynamic Perspective, which allows the user to tilt and move the phone to view pictures, menus and applications from various views.

Carolina Milanesi, Kantar Worldpanel ComTech Chief of Research told the International Business Times that some features on the new Fire Phone were compelling, “but weren’t delivered in the right way.”

Although Amazon introduced new features into the smartphone industry, consumers were not lured away from their current operating systems.

In response to switching phone providers, Holly Jordan, a junior social work major at UMBC said, “I like the features offered on other smartphones but I am more comfortable with the iPhone since I’ve had it for a while. I feel I can’t switch smartphones as easily because all of my applications and music are carried through Apple platforms, making change very difficult.”

The unsuccessful Fire Phone proves just how difficult entering the market for smartphones can be.

To compete with Samsung and Apple, Amazon must find a niche that current smartphones are missing to attract consumers away from their current operating systems.

The Fire Phone was not just a minor failure, but one that had a profound impact on the company in the eyes of Wall Street and investors. Releasing their earnings for the third quarter, Amazon reported $83 million dollars worth of Fire Phone inventory sitting stagnant in their warehouses.

After spending millions on research and development for their smartphone, Amazon was left with a net loss of $437 million for their third quarter earnings.

In an attempt to unload the Fire Phone inventory from their warehouses, Amazon has now dropped the price of the smartphone to .99 cents on a new two year contract.

With investments ranging from grocery stores to e-commerce in India, investors have become concerned with the company’s direction.

Amazon is famous for injecting earned revenue straight back into the business, and ultimately earning a profit of zero for shareholders. After its existence within the technology industry for 21 years, Amazon’s cumulative profit is less than the total profit Exxon Mobil earns in just two and a half weeks.

Although failing products is a part of being in business, critics argue Amazon’s failure to report significant profit further magnifies the flop of the Fire Phone.

Amazon’s losses were significantly lower than Microsoft’s $900 million loss incurred when releasing their smartphone, but both technology giants have failed to enter and compete in the smartphone industry.

The market appears to be resistant to change when it comes to smartphones, with consumers hesitant to change operating systems.

 

One thing is for sure, the high demands of consumers within the smartphone industry will promote competition between the major technology giants. The initial release of the Fire Phone may have been a failure, but all technology companies have experienced flops at some point during their existence.

Failure is a crucial part of innovation and business, and Amazon will most likely return to the drawing board to ensure their next release makes a profound splash within the market.

 

http://www.ibtimes.com/fire-phone-why-amazons-smartphone-failed-just-facebook-home-1712510

http://www.amazon.com/Fire_Phone_13MP-Camera_32GB/dp/B00EOE0WKQ

http://www.geekwire.com/2014/can-amazon-recover-disastrous-fire-phone-launch/

http://www.forbes.com/sites/hershshefrin/2014/10/27/take-analyst-forecasts-with-a-grain-of-salt-especially-on-amazon/

http://www.investopedia.com/stock-analysis/031414/amazon-never-makes-money-no-one-cares-amzn-aapl-wag-azo.aspx