Amazon Takes $170 Million Loss over Fire Phone

Amazon has made bold movies into different industries this year. They stepped into the media-streaming box industry with the Amazon Fire TV, the games industry with the purchase of Double Helix Games, and also the smartphone market with the Amazon Fire Phone. While we’re still waiting to see how successful the company’s foray into the media and games industry are, we can mark its entry into the smartphone business an utter failure.

Amazon CFO Tom Szkutak revealed to investors that the company has lost $170 million dollars, and currently has $83 million Fire Phones in inventory that have failed to sell. Szkutak did not reveal whether Amazon will continue to pursue the smartphone industry in 2015, or just give up.

There are numerous reasons for why the Fire Phone isn’t selling. First off, the Fire Phone was exclusive to AT&T in the U.S. While AT&T is the second largest wireless network in the country, it’s dangerous to sign exclusivity deals when more popular phones are launching on all four major providers. Secondly, the phone has been hampered by mixed reviews, and the fact that the Fire Phone doesn’t have a defining feature that make it a must have device. For example, the Fire Phone is currently sitting at 2/5 on Amazon compared to the iPhone 6’s 4/5.

Probably the most damaging decision Amazon made was launching the phone in July, mere months from the release of the iPhone 6, iPhone 6 Plus, and the Galaxy Note 4. Many AT&T customers likely just waited for these hotly anticipated devices rather than jumping ship to Amazon.

The Amazon Fire Phone is currently available through AT&T for $0.99 on a two-year contract. You’ll get a year Amazon Prime membership for purchasing the phone.

Thanks, CNET!