Amazon drastically cut the price of its 32-bit Fire Phone to $0.99 from $199, in an attempt to increase the Fire Phone’s mediocre sales, only a few months after the phone’s debut. The price cut come strategically a few days before Apple’s announcement of a new iPhone and a new mobile payments system, Apple Pay. The Fire Phone’s price still includes a free year of Amazon Prime, a service that usually costs $99 annually, and a 2-year contract with AT&T. Amazon clearly intends for the Fire Phone to boost sales to Amazon’s site by tracking consumer behavior and by giving consumers easier access to Amazon products. Amazon has invested heavily in hardware to make purchases easier from the site, including a set-box top for streaming video and a laser-tipped wand for scanning household items to purchase on Amazon (Amazon Dash).
Amazon Slashes Price of Fire Phone
By Greg Bensinger, WSJ
Amazon.com Inc. AMZN +0.37% slashed the price of its Fire smartphone to near zero just two months after releasing the device, suggesting sales may be sluggish.
The company cut the price to 99 cents, from $199, for the 32-gigabyte version with a two-year contract, according to a statement. The 64-gigabyte version will sell for $99,down from its original price of $299, Amazon said.
The Fire phone’s pared price comes ahead of Apple Inc. AAPL +2.59% ‘s expectedunveiling of its latest iPhone, which could come with new mobile-payment capabilities and screen technology. The Fire phone got mixed reviews, with some critics saying the holographic screen and product-recognition software didn’t elevate it above competitors’ devices.
The Fire phone commanded about 0.02% of ad impressions in North America in the first three weeks after its release, according to an estimate from Chitika Insights. Amazon hasn’t released sales data for the smartphone and during its most recent quarterly earnings call said it might not do so.
Amazon first began selling the Fire phone in stores in late July. It was expected to sell between 2 million and 3 million phones in the U.S. through the end of this year, according to J.P. Morgan analyst Doug Anmuth. Apple, by comparison, sold an average 2.7 million iPhones a week in its most recent quarter, a global figure.
Amazon has spent heavily on new devices, including a set-top box for streaming video and a laser-equipped wand for scanning merchandise from home. The hardware is designed to make it even easier for people to buy things like video, music and groceries through Amazon’s site.
The 99-cent version of the Fire phone still comes with a year of the Amazon Prime unlimited shipping membership, though Amazon has indicated that is a limited-time offer.