Amazon slashed the price of Fire Phone

Amazon today slashed the price of its three-month-old Fire Phone to 99 cents, an obvious attempt to boost slow sales.

The Fire Phone, which originally sold for $649 minus a contract commitment and for $199 with a two-year deal with AT&T, was marked down to $449 without a contract and 99 cents with one.

Amazon spun the dramatic price cut in the best possible light. “Fire is another example of the value Amazon delivers to customers,” said Ian Freed, vice president of Amazon Devices, in a statement Monday.

In fact, by all accounts, the Fire has done poorly. According to data mining done a month ago by ad network Chitika, Fire Phone usage grew only “incrementally” in the device's first two months. By Aug. 14, Amazon's phone accounted for just 0.02% of all smartphone-based ad impressions.

Chitika's number was not a measurement of the number of devices in use, but of the online activity of Fire Phone users: The calculation was best described as “usage share.”

StatCounter, another metrics vendor that also tracks usage share, did not even list Fire Phone in its operating system data for the month of August.

In June, when Amazon CEO Jeff Bezos introduced the Fire Phone, most analysts slammed the pricing, saying that the online retailer needed to do more than simply mimic the competition.

“If the $199 on 2yr contract is all there is to Fire Phone pricing it will be a tough sell,” Carolina Milanesi , chief of research and head of U.S. business for Kantar WorldPanel Comtech, said on Twitter that day.

“Does the 99-cent price matter? Sure it does. But in the scheme of things, does it help? No, because you still have to have a contract,” Milanesi said in an interview today.

She pointed out that Apple, for example, gives away the iPhone 4S to customers who sign up for a two-year contract with a mobile carrier. The Fire Phone's “unlocked” price of $449 is also identical to that of an off-contract iPhone 4S.

Amazon missed its chance to make a splash months ago, Milanesi argued. “This price then would have sent a different message,” she said. “It would have made a difference because at the time [mid-June] there was not a lot going on. But to do this the day before Apple announces its new iPhones, and right after Samsung showed off its Galaxy Note 4 and Note Edge?”

The Fire Phone can be purchased direct from Amazon; in the U.S. it's an AT&T exclusive.

Source: www.cio.com