Amazon introduced its new Fire phone four months ago featuring what the company called “breakthrough technology.” The phone is now selling on Amazon for 99 cents with a contract – which ABC News compared to the price of a fast food hamburger.
Amazon recently announced during its quarterly earnings call on Thursday that it assumed a $170 million cost related to the phone for “inventory evaluation and supplier commitment costs,” reported the news source. The company also announced that it had approximately $83 million worth of phones still in inventory at the end of the quarter, according to an Associated Press report.
Analysts question the creation of the Fire phone
Analysts are questioning whether it was smart for the company to create a device in the first place. Patrick Moorhead, principal technology analyst at Moor Insights and Strategy, believes that it was not a good move.
“I think that Amazon was more interested in monetizing its buyers than actually delivering a compelling experience,” Moorhead told ABC News.
Fire phones come with features that allow users to identify products and then find them on the retailer’s website. The phone also features a 3D display which should have been good for games. Moore pointed out errors with this as well.
“I could imagine on a 10-inch tablet playing some really cool 3D games, but their display was too small… It was the wrong platform,” Moorhead added.
Reviews of the Fire phone are bad on Amazon’s website
On Amazon’s website, reviews of the phone are not good, and users commented that they were extremely disappointed and that the phone was a sad product.
Thomas Szkutak, Amazon’s chief financial officer, commented during the earnings call that the company will be more discerning when designating future projects.
“There’s still lots of opportunity in front of us but we know that we have to be very selective about which opportunities we pursue,” said Szkutak, reported ABC News.
Amazon also announced on Thursday that it was assuming a third quarter loss of $437 million. Analyst forecasts for revenue were also higher than what the company actually earned – $20.58 billion.
The holiday season is approaching and Amazon hopes to capitalize on increased consumer spending during Black Friday and Cyber Monday. Hopefully, Thanksgiving and Christmas sales will make up for losses tied to the phone’s poor reception in the market.