Today we know Amazon as one of the big 5 technology companies in the U.S. Jeff Bezos started the company in his garage in 1994, and today it’s the most valuable retailer in the U.S. Some people reading this article; may have an Amazon Prime account, own a Kindle, have an Echo device in your home, grocery shop at Whole Foods, watch tv on a Fire stick, have a Ring camera system or just ordered stuff from Amazon and have it delivered to their home. All of these actions or things are under the Amazon umbrella and are essential in our current world. During its meteoric rise, Amazon has made very few mistakes, but one particular one stands out, the Fire phone.
They released the Fire phone in July 2014, to much fanfare. The new device by Amazon was supposed to be its latest victory and also a competitor to the Apple iPhone. A big build up led to less than 35,000 phones being sold after two months of being on the market. AT&T the sole cellular provider of the phone dropped the price from $200 to 99 cents with a two-year contract. Amazon took a $170 million write down because of the costs associated with the phone, and it still had over $83 billion worth of the phone in its inventory. How did such a high-profile product by a big company fail so badly? Keep reading to find out.
1. You want how much for it?
On first release you could buy a Fire phone for $650 or $199 with a two year AT&T contract. For perspective, the new iPhone 6 at the time also cost $650. Preorders for the iPhone 6 exceeded 4 million and Apple sold 10 million iPhone 6 within the first 3 days of its release. Why would anybody by the Fire phone, when for the same price you could get a brand new iPhone? The iPhone had a pedigree of being the best smartphone, Fire phone was a new product, with some gimmicks but no product history. It’s easy to see why most consumers picked the iPhone over the Fire phone.
2. What’s in a name?
Amazon, though one of the big 5 tech companies is synonymous with value, good bargains and well a place to get things cheap. Think of Amazon as a virtual Wal-Mart. You go to the store to get good value on an item, not to buy the most expensive item in the store. Smart phones are aspirational items to most buyers. When a person buys a smart phone, they reach for the aspirational Apple iPhone, rather than a Fire phone. The Fire phone was competitive in technology to other smart phones in 2014, but an Amazon Fire phone is just not sexy or hip to most consumers.
3. Apps are Important
The Amazon Fire phone ran on a heavily modified version of the Android operating system. Amazon wanted to differentiate itself from other Android phones. The problem was the system was so changed, that key Google Apps like Maps or Gmail weren’t available on the phone. Amazon ran its own App store that had nowhere near the amount of Apps as Android or Apple’s App store. With this move, Amazon’s App selection was on par with Microsoft. People like to use Apps, especially essential ones like Maps. Amazon decision placed the Fire Phone in the speciality niche smartphone market with the likes of Microsoft and Blackberry. That market is a small percentage of the smartphone market. Amazon software decision among other mistakes made the Fire phone a non-option for most buyers.
4. Parlor tricks can only hold one’s attention for so long
The Fire Phone had three really cool tricks. The first was it had five front-facing cameras that could pick up wrist and hand movements to interact with the phone. Another trick was Dynamic Perspective, the tool set up a 3-D display that you could view with no special glasses and at all angles. The last trick was Firefly. It was a feature that used the phone’s camera and microphone. A user could point the phone at an object or media, and the phone would direct you to the Amazon website to buy them.
The issues were many. The hand and wrist gestures got really old after a few attempts. There were not enough games or apps to take advantage of the 3-D features, and most people back in 2014 purchased items from Amazon on their laptops or home computers. All these tricks, though initially sounding cool, didn’t add any long-term value to the phone’s use. When Apple releases an extra feature for the iPhone, there is an entire ecosystem set up around its release to ensure its success. Amazon just released these features and just hoped for the best. These features did not move consumers.
All was not lost with the Fire Phone. In the phone’s making, Amazon came up with the technology that would eventually turn into Alexa. Amazon has sold millions of Echo products that feature Alexa, the smart digital voice assistant.
In the end, Amazon could salvage something out of the mistake that was the Fire phone. Every corporation and human makes mistakes. The smart move is to gleam what lessons you can learn from the mistake so that it is not repeated. I assume Amazon will make another attempt to enter the smart phone market. Hopefully, they heeded the lessons they learned from the Fire phone.
