Innovation doesn’t always pay off and the same has been evident with Amazon’s Fire phone, which has turned out to be a disaster, revealed the company in third quarter earnings call recently.
Introduced with much fanfare by Amazon’s Jeff Bezos in June this year, Amazon Fire phone included some pretty exciting technologies like Dynamic Perspective and Firefly, but it failed to garner favourable response from the consumers. According to Amazon, it has Fire phones worth $83 million lying in the warehouses. The company stated that it is taking a $170 million write-down on account of the Fire phone, for which it had ordered too much inventory.
“Consolidated segment operating loss includes charges of approximately $170 million, primarily related to the Fire phone inventory evaluation and supplier commitment cost,” Amazon CFO Tom Szkutak noted in the earnings call.
The first signs of the Fire phone’s poor performance were seen when the company decided to reduce the pricing of the phone from $199 with contract to 99 cents with contract on AT&T, which exclusively retails the smartphone in the United States.
There is no word on whether the Fire phone mess will push Amazon out of the phone business or the company plans to continue and bring a second-generation device next year.