Even the most popular smartphones are cheap, under the right circumstances. Smartphones are available for a few dollars a month when tethered to carrier subscriptions. AT&T Inc. (NYSE: T) offers the new Samsung Galaxy S6 32 GB model for $22.84 a month, as long as the customer buys a 30-month subscription. The odds anyone will pay $449 for a smartphone approach zero. The utility of a $449 Fire Phone is very limited. It only works on the AT&T and T-Mobile US Inc. (NASDAQ: TMUS) GSM networks. It will not operate at all on the Verizon Communications Inc. (NYSE: VZ) or Sprint Corp. (NYSE: S) CDMA networks.
Amazon continues to market the Fire Phone as if it were a success or had some chance of becoming a success in the future. It comes with a full year of Prime, which is Amazon’s flagship service product. Prime is a marriage of free shipping for products ordered from Amazon and unlimited access to its free video streaming service. Free Prime should be an inducement for consumers to choose that Fire Phone. Apparently, even the Prime add-on has not helped increase Fire Phone sales.
Amazon’s management knew very early in the launch cycle that the Fire Phone was a failure. A number of media outlets reported that sales in the first month the smartphone was available only reached 35,000. Apple probably sells that many iPhones an hour.
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The persistent focus on selling the Fire Phone is another example that the Amazon founder rarely gives up on a product, if only to maintain the image that his company is not capable of failure. Amazon’s tablet, the Kindle Fire, has failed nearly as badly as Fire Phone. Late last year, Amazon sharply lowered prices on the Kindle Fire. Amazon continues to press the sale of Kindle Fire, even in a market awash in popular tablets. This is another Amazon product that has been outflanked by Apple and Samsung.
An Amazon Fire Phone priced at $449? If a product will not sell, at least make certain it appears wildly successful.
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