Featured Mobileburn Video

Amazon's Fire Phone costs the company $174 million

News by Luke Jones on Saturday October 25, 2014.

amazon fire phone · amazon news · android news · smartphone news · luke jones

Sponsored links, if any, appear in green.

Fire Phone
Fire Phone

Most of us saw from day 1 what Amazon could not see, the Fire Phone would be a massive flop. Here's the thing, it is a good smartphone, but it lacks something, is ugly, has too many gimmicks, and was expensive... it is undoubtedly the mobile disaster of the year. That it is quickly being forgotten sums up the scale of Amazon's miss-step and the retailer has been left with more than hurt pride because of the Fire Phone.

Indeed, dousing this particular blaze has cost the company $174 million in a write off to suppliers who simply cannot shift the Fire Phone, even though it is now free on contract. For some inexplicable reason, Amazon totally misjudged the consumer and thought people would lap up the Fire Phone, which basically acts as a gateway to the company's retail services. They were so confident that even by the end of the third quarter there was $83 million worth of Fire Phone stock lying around.

That $174 million write down is only the start of the problems though as Amazon also posted a $544 million loss during the last quarter, the largest slip in the company's history. It won't get better either as Amazon predicts the next financial results will reveal another three month loss of around $500. So, the company will lose over $1 billion in a single year, and while the Fire Phone is not entirely to blame for that, it is almost certainly the biggest factor.

It has gotten so bad for Amazon that Wall Street is turning its back on the company, as pointed out by Reuters:

(Amazon's) once fairy-tale ride on Wall Street has hit its most jarring bump yet.

The company that for years enthralled investors with improbable growth and earned one of the technology sector's highest valuations drew widespread ire after a spectacular results let-down on Thursday.

Amazon missed expectations across the board - on margins, on its net loss and on revenue. An unaccountably poor 7 to 18 percent revenue growth forecast for the typically strongest holiday quarter was the final straw for some.

Coming just three months after a big let-down in July, the warning may represent a tipping point for investors who are already wary of a triple-digit price-earnings ratio and a persistent unwillingness to throttle back spending.

"They're becoming much too distracted in all these other efforts" outside core businesses like online retailing and web services, said Matthew Benkendorf, portfolio manager at Vontobel Asset Management. Benkendorf unloaded his Amazon holdings a year ago and said he would be skeptical of future involvement even if the stock falls further.

"They are their own worst enemy to success," he said. "They really need to do some soul searching and get focused."

On the bright side, the company's Fire TV streaming box seems to have struck a chord with consumers as Amazon says it is the best-selling streaming box in the UK, US, and Germany. What that means in terms of revenue is unclear, but there is at least some good news for the company.

The Amazon Fire Phone is an Android-powered device that is meant to offer something familiar to users but unique to Amazon. The phone has a 4.7-inch 720p IPS display, a 2.2 GHz quad-core processor (Qualcomm), Adreno 330 GPU, and 2GB of RAM. It also has a 2,400 mAh battery and 32GB or 64GB of internal storage. Those specs will be necessary because Amazon has packed a great deal of features into the device.

source: Reuters

blog comments powered by Disqus

About the author

Luke Jones
Luke Jones is the Managing Editor at MobileBurn.com and is the person you need to speak to about the content on the site. Luke studied creative writing at degree level before carving out a reputation as a freelance tech writer. He settled here at MobileBurn, where he reviews devices and contributes to the news, as well as overseeing the site's content and direction.

Related Stories