4 ms·

Amazon exec: We priced the Fire phone wrong

37 points by denzil_correa 12y ago

seanhandley 12y ago
*wrongly
- wbkang 12y ago
  Actually, wrong can be an adverb just like quick in 'real quick.' See: http://www.merriam-webster.com/dictionary/wrong http://www.merriam-webster.com/dictionary/wrong
  - baddox 12y ago
    And, for the prescriptivists out there, don't fall victim to the recency illusion. The usage of "wrong" as an adverb, like the usage of "they" as a gender-neutral singular pronoun, is many centuries old.
ParvusPonte 12y ago
The article mentions Amazon's Fire Phone 2-star consumer rating, but this piece of information has to be taken with a grain of salt. Phone's Amazon page was bombarded with fake reviews from activist groups that are trying to get Amazon to switch to renewable energy sources: http://www.amazon.com/forum/top%20reviewers?_encoding=UTF8&cdForum=Fx2Z5LRXMSUDQH2&cdThread=Tx2KUEQB4ZJ9B8C http://www.amazon.com/forum/top%20reviewers?_encoding=UTF8&c...
- philsnow 12y ago
  Even if you discard _all_ the one-star reviews, I wouldn't be excited about the rest of the ratings.
adventured 12y ago
"Still, $83 million of unsold phones is a lot, even for a tech giant like Amazon." The article refers to this twice, and I can't figure out why. That's not a lot of unsold inventory compared to the disaster the Fire phone was. I would have expected a much higher number than $83 million. That's equal to not quite 1% of their cash. The real damage was to their reputation, that was a far greater hit than $83 million. Dud products taint all of your other products by association (especially those in the Fire lineup).
pinaceae 12y ago
erm, they slashed it to 99c, as the article mentions, but it still has not gotten any significant traction - full blown write off. it's just a shit device by a company that seems to try to emulate apple on some fronts, but without the taste or acumen for proper hardware and software. AWS and Kindles are great. never seen a Fire tablet in wild.
- steven777400 12y ago
  Just for complete transparency, 99c is the contract price, so you are still paying for the phone, it's just built in to a higher monthly service cost. The off-contract price for the fire phone is currently $449 on Amazon's website. Compare that to the Moto G which is off-contract at less than half the price and still a very usable and featured phone.
- WalterSear 12y ago
  Amazon's Lab 126 is micromanaged from two states away by Jeff Bezos. It's a toxic environment where only yes-men can thrive. It doesn't help that Jeff Bezos runs Amazon like a miserly cornerstore Wallmart - looking everywhere he can to cut corners, to the detriment of his staff and his product. I'm impressed that they have been able to iteratively improve on the Kindle. Given what I have seen, I would hazard that with upper management's obsessive spotlight focused on the Phone and Tablet, the Kindle developers have been able to get on with their work. The same may be the case for AWS - no longer a sexy new market, and consequently able to get on with it's work.
  - kolev 12y ago
    I've heard terrible things about Lab 126 and I'm happy I've turned down several of their job offers already. I hear backstabbing is daily business over there, everybody can submit an anonymous reviews for your coworkers to your manager, and the whole environment is a zero-sum game. I'm a big fan of Jeff Bar, Werner Vogels, and, of course, Jeff Bezos, but, I guess, this is another instance of "far from the sight, far from the heart"!
    - 12y ago
nkurz 12y ago
How is it possible that this article talks about Amazon slashing the price of the phone from $199 to 99 cents without ever mentioning that neither of these are actually 'prices', but arbitrary numbers used by advertisers to make the required $1000+ contract seem more appealing? Lest anyone misunderstand, the 32GB phone actually costs $449 if you want to buy one, and the quoted prices require the purchaser to sign a two-year contract for service. I can see why the advertisers benefit from this approach, but I can't understand why the public is complicit. Is it that people don't want to think about how much they are actually paying?
- JonoBB 12y ago
  I especially love this part: > In September, the company slashed the Fire phone’s price from $199 to 99 cents, a steep discount Limp said yielded significantly better sales. Well, of course its going to yield significantly better "sales" when you sell your item for something approximating zero.
- IBM 12y ago
  I'm not sure why everyone seems to think carrier subsidies are a con. Amazon isn't getting that $1000+, they get whatever the non-contract price is of the phone. Carriers subsidize some of that cost in-exchange for some guaranteed cash flow for 2 years.
  - eropple 12y ago
    The full freight of the phone, plus the cost of off-contract service with somebody like Straight Talk ($50/month for unlimited everything for me, they throttle me to 128Kbps after 5GB of data), is much, much cheaper than the initial buy-in plus the delta of the monthly carrier bill. The situations where carrier lock-in makes sense are few and far between (generally around large family plans), and outside of those situations you're paying hundreds of dollars extra over the life of the phone and the contract.
    - IBM 12y ago
      I've tried MVNOs in the past and they were always a sub-par experience. I've found it's "you get what you pay for" compared to Verizon.
kolev 12y ago
I would never buy a phone that requires me to repurchase thousands of dollars of apps, games, music, movies, books, etc. For the same reasons I stay away from Kindle Fire. Until there's a consumer law requiring companies to honor your digital purchases of the same intellectual property on difference marketplaces, I'll stick with the devices running the monopolistic Google Play.
sigzero 12y ago
It had nothing to do with price.
potatolicious 12y ago
It wasn't priced wrong, they made the wrong phone for the price. It is possible to produce a $650 off-contract phone (the only useful comparison given the variance between carriers) that's desired. They just failed to do this. The Samsung Galaxy flagships sell like hotcakes at this price range. They set out to make a premium phone and failed - they've cut the price and the phone still isn't moving off shelves. I sincerely hope that this is just PR-speak and that Amazon doesn't seriously believe pricing was the key point of failure.
SiVal 12y ago
The phone market, ironically, doesn't have network effects, because any phone can talk to any other phone. But it does have scale and timing effects, because developers decide which platform(s) to develop for, in part, by the number of buyers, and buyers decide which platform to buy based on how well developed, and both accumulate platform inertia over time that defeats any minor advantages of later, alternative platforms. The lack of network effects means that you can get both developers and buyers to adopt a new platform--it's not hopeless--but the scale and timing make it difficult enough that any new phone platform now would need to offer a major advantage, or it shouldn't bother. It would have to be something remarkable. Maybe Amazon, as a major retailer, could have done something along the lines of Apple Pay, but where the phone carrier got a cut of each purchase transaction in exchange for a special, reduced rate plan that made Amazon phone take off as the standard phone for schoolkids. Or Amazon stays close enough to standard Android to make development easy for Android developers but then leverages their AWS to make some sort of deal such as Amazon phone apps get free server-side infrastructure and services on AWS. Or anything ordered through the phone gets Amazon Prime delivery and you can stream Amazon Prime video and music through the phone for free. Whatever, they need to come up with something that offers a remarkable advantage to some market segment or not bother.
- MBCook 12y ago
  Cell phone certainly have network effects, it's just that they're all software. You're right the carrier doesn't really matter at this point but there's no way I would switch from iOS to Amazon's phone because there just isn't any software available. Even if we ignore the stuff I've already purchased, there are tons of little games and utilities and other fun things that are never going to come out for a fourth tier platform. Even with all the money they have Amazon can't really force people to make software for their phones. Microsoft has tried the "buying developers mindshare" thing for Windows mobile and it hasn't worked well for them. They're still in third place by a giant margin. At this point you can't subsidize yourself into having a first-class software ecosystem. It would just cost way too much. And since Amazon doesn't want to be just another Android vendor, they're not going to let standard Android software run on their phones. At that point they need an insanely compelling feature to get people and "easy Amazon shopping" isn't that. Why should I get a phone for one dollar that has almost no software when I can get an iPhone 5c for free on contract with a ton of software and accessories? I know they're also good Android phones available free on contract.
mmanfrin 12y ago
I was expecting them to meet the Nexus line at $299, since Amazon's M-O with tech devices is to make them cheap, affordable, and locked in to their ecosystem, a la the Kindle, Fire, TV, etc. I was going to buy one at that price for the novelty of Amazon's first phone. Then they released it at the price for the most premium phones on the market. I'm pretty sure 95% of the tech world saw this coming.
ufmace 12y ago
They don't even mention the real issue of the Play store, or lack thereof. The real reason nobody seems to want it is that the apps aren't there, and they tried to substitute some silly gimmicks in hope that nobody would notice. If they Play store and the rest of the Google apps were there, I bet it would sell fine at the original price. Without them, they're having trouble giving them away. Of course, that would mean kowtowing to Google, and the real purpose of the Fire line of Android forks is get Amazon out from under Google's thumb. They're welcome to try, but I'm not about to sacrifice my experience to help them. The deeper issue yet is the still open question of the third ecosystem. Apple and Google have theirs already. It remains to be seen if there is room for a third, but plenty of companies are opening their wallets to try. IMHO, Microsoft looks to have the best shot at it now. For Amazon, it's hard to see them pulling it off when the core of what they're working with is a fork of Android. How are we supposed to believe that they're ever going to be better than Google is at Android?
- WildUtah 12y ago
  Amazon doesn't need Google to run a competitive app experience. The Android APIs are mostly open source and Amazon can copy them. The problem is that Amazon is hard on developers, doesn't let them set prices, won't automatically approve new apps and upgrades, gives new apps harsh conditions, and doesn't promote developers' apps to a large user base. Amazon could have a better user and developer experience but thinks it's Apple instead of Google. But only Apple is Apple.
bane 12y ago
Features I didn't want; features I wanted it didn't have.
jrs235 12y ago
Even at 99 cents I won't consider it. At&t is a non starter for me. In my eyes, they got the carrier wrong.

37 points by denzil_correa 12y ago

seanhandley 12y ago

*wrongly

wbkang 12y ago
Actually, wrong can be an adverb just like quick in 'real quick.' See: http://www.merriam-webster.com/dictionary/wrong http://www.merriam-webster.com/dictionary/wrong
- baddox 12y ago
  And, for the prescriptivists out there, don't fall victim to the recency illusion. The usage of "wrong" as an adverb, like the usage of "they" as a gender-neutral singular pronoun, is many centuries old.

ParvusPonte 12y ago

The article mentions Amazon's Fire Phone 2-star consumer rating, but this piece of information has to be taken with a grain of salt. Phone's Amazon page was bombarded with fake reviews from activist groups that are trying to get Amazon to switch to renewable energy sources: http://www.amazon.com/forum/top%20reviewers?_encoding=UTF8&cdForum=Fx2Z5LRXMSUDQH2&cdThread=Tx2KUEQB4ZJ9B8C http://www.amazon.com/forum/top%20reviewers?_encoding=UTF8&c...

philsnow 12y ago
Even if you discard _all_ the one-star reviews, I wouldn't be excited about the rest of the ratings.

adventured 12y ago

"Still, $83 million of unsold phones is a lot, even for a tech giant like Amazon." The article refers to this twice, and I can't figure out why. That's not a lot of unsold inventory compared to the disaster the Fire phone was. I would have expected a much higher number than $83 million. That's equal to not quite 1% of their cash. The real damage was to their reputation, that was a far greater hit than $83 million. Dud products taint all of your other products by association (especially those in the Fire lineup).

pinaceae 12y ago

erm, they slashed it to 99c, as the article mentions, but it still has not gotten any significant traction - full blown write off. it's just a shit device by a company that seems to try to emulate apple on some fronts, but without the taste or acumen for proper hardware and software. AWS and Kindles are great. never seen a Fire tablet in wild.

steven777400 12y ago
Just for complete transparency, 99c is the contract price, so you are still paying for the phone, it's just built in to a higher monthly service cost. The off-contract price for the fire phone is currently $449 on Amazon's website. Compare that to the Moto G which is off-contract at less than half the price and still a very usable and featured phone.
WalterSear 12y ago
Amazon's Lab 126 is micromanaged from two states away by Jeff Bezos. It's a toxic environment where only yes-men can thrive. It doesn't help that Jeff Bezos runs Amazon like a miserly cornerstore Wallmart - looking everywhere he can to cut corners, to the detriment of his staff and his product. I'm impressed that they have been able to iteratively improve on the Kindle. Given what I have seen, I would hazard that with upper management's obsessive spotlight focused on the Phone and Tablet, the Kindle developers have been able to get on with their work. The same may be the case for AWS - no longer a sexy new market, and consequently able to get on with it's work.
- kolev 12y ago
  I've heard terrible things about Lab 126 and I'm happy I've turned down several of their job offers already. I hear backstabbing is daily business over there, everybody can submit an anonymous reviews for your coworkers to your manager, and the whole environment is a zero-sum game. I'm a big fan of Jeff Bar, Werner Vogels, and, of course, Jeff Bezos, but, I guess, this is another instance of "far from the sight, far from the heart"!
  - 12y ago

nkurz 12y ago

How is it possible that this article talks about Amazon slashing the price of the phone from $199 to 99 cents without ever mentioning that neither of these are actually 'prices', but arbitrary numbers used by advertisers to make the required $1000+ contract seem more appealing? Lest anyone misunderstand, the 32GB phone actually costs $449 if you want to buy one, and the quoted prices require the purchaser to sign a two-year contract for service. I can see why the advertisers benefit from this approach, but I can't understand why the public is complicit. Is it that people don't want to think about how much they are actually paying?

JonoBB 12y ago
I especially love this part: > In September, the company slashed the Fire phone’s price from $199 to 99 cents, a steep discount Limp said yielded significantly better sales. Well, of course its going to yield significantly better "sales" when you sell your item for something approximating zero.
IBM 12y ago
I'm not sure why everyone seems to think carrier subsidies are a con. Amazon isn't getting that $1000+, they get whatever the non-contract price is of the phone. Carriers subsidize some of that cost in-exchange for some guaranteed cash flow for 2 years.
- eropple 12y ago
  The full freight of the phone, plus the cost of off-contract service with somebody like Straight Talk ($50/month for unlimited everything for me, they throttle me to 128Kbps after 5GB of data), is much, much cheaper than the initial buy-in plus the delta of the monthly carrier bill. The situations where carrier lock-in makes sense are few and far between (generally around large family plans), and outside of those situations you're paying hundreds of dollars extra over the life of the phone and the contract.
  - IBM 12y ago
    I've tried MVNOs in the past and they were always a sub-par experience. I've found it's "you get what you pay for" compared to Verizon.

kolev 12y ago

I would never buy a phone that requires me to repurchase thousands of dollars of apps, games, music, movies, books, etc. For the same reasons I stay away from Kindle Fire. Until there's a consumer law requiring companies to honor your digital purchases of the same intellectual property on difference marketplaces, I'll stick with the devices running the monopolistic Google Play.

sigzero 12y ago

It had nothing to do with price.

potatolicious 12y ago

It wasn't priced wrong, they made the wrong phone for the price. It is possible to produce a $650 off-contract phone (the only useful comparison given the variance between carriers) that's desired. They just failed to do this. The Samsung Galaxy flagships sell like hotcakes at this price range. They set out to make a premium phone and failed - they've cut the price and the phone still isn't moving off shelves. I sincerely hope that this is just PR-speak and that Amazon doesn't seriously believe pricing was the key point of failure.

SiVal 12y ago

The phone market, ironically, doesn't have network effects, because any phone can talk to any other phone. But it does have scale and timing effects, because developers decide which platform(s) to develop for, in part, by the number of buyers, and buyers decide which platform to buy based on how well developed, and both accumulate platform inertia over time that defeats any minor advantages of later, alternative platforms. The lack of network effects means that you can get both developers and buyers to adopt a new platform--it's not hopeless--but the scale and timing make it difficult enough that any new phone platform now would need to offer a major advantage, or it shouldn't bother. It would have to be something remarkable. Maybe Amazon, as a major retailer, could have done something along the lines of Apple Pay, but where the phone carrier got a cut of each purchase transaction in exchange for a special, reduced rate plan that made Amazon phone take off as the standard phone for schoolkids. Or Amazon stays close enough to standard Android to make development easy for Android developers but then leverages their AWS to make some sort of deal such as Amazon phone apps get free server-side infrastructure and services on AWS. Or anything ordered through the phone gets Amazon Prime delivery and you can stream Amazon Prime video and music through the phone for free. Whatever, they need to come up with something that offers a remarkable advantage to some market segment or not bother.

MBCook 12y ago
Cell phone certainly have network effects, it's just that they're all software. You're right the carrier doesn't really matter at this point but there's no way I would switch from iOS to Amazon's phone because there just isn't any software available. Even if we ignore the stuff I've already purchased, there are tons of little games and utilities and other fun things that are never going to come out for a fourth tier platform. Even with all the money they have Amazon can't really force people to make software for their phones. Microsoft has tried the "buying developers mindshare" thing for Windows mobile and it hasn't worked well for them. They're still in third place by a giant margin. At this point you can't subsidize yourself into having a first-class software ecosystem. It would just cost way too much. And since Amazon doesn't want to be just another Android vendor, they're not going to let standard Android software run on their phones. At that point they need an insanely compelling feature to get people and "easy Amazon shopping" isn't that. Why should I get a phone for one dollar that has almost no software when I can get an iPhone 5c for free on contract with a ton of software and accessories? I know they're also good Android phones available free on contract.

mmanfrin 12y ago

I was expecting them to meet the Nexus line at $299, since Amazon's M-O with tech devices is to make them cheap, affordable, and locked in to their ecosystem, a la the Kindle, Fire, TV, etc. I was going to buy one at that price for the novelty of Amazon's first phone. Then they released it at the price for the most premium phones on the market. I'm pretty sure 95% of the tech world saw this coming.

ufmace 12y ago

They don't even mention the real issue of the Play store, or lack thereof. The real reason nobody seems to want it is that the apps aren't there, and they tried to substitute some silly gimmicks in hope that nobody would notice. If they Play store and the rest of the Google apps were there, I bet it would sell fine at the original price. Without them, they're having trouble giving them away. Of course, that would mean kowtowing to Google, and the real purpose of the Fire line of Android forks is get Amazon out from under Google's thumb. They're welcome to try, but I'm not about to sacrifice my experience to help them. The deeper issue yet is the still open question of the third ecosystem. Apple and Google have theirs already. It remains to be seen if there is room for a third, but plenty of companies are opening their wallets to try. IMHO, Microsoft looks to have the best shot at it now. For Amazon, it's hard to see them pulling it off when the core of what they're working with is a fork of Android. How are we supposed to believe that they're ever going to be better than Google is at Android?

WildUtah 12y ago
Amazon doesn't need Google to run a competitive app experience. The Android APIs are mostly open source and Amazon can copy them. The problem is that Amazon is hard on developers, doesn't let them set prices, won't automatically approve new apps and upgrades, gives new apps harsh conditions, and doesn't promote developers' apps to a large user base. Amazon could have a better user and developer experience but thinks it's Apple instead of Google. But only Apple is Apple.

bane 12y ago

Features I didn't want; features I wanted it didn't have.

jrs235 12y ago

Even at 99 cents I won't consider it. At&t is a non starter for me. In my eyes, they got the carrier wrong.