DAVID STREITFELD

San Francisco, 9 September

S
ixty thousand people vied to
attend the unveiling of
Amazons first smartphone
in late June.
If only the retailer could per-
suade those fans or anyone, real-
ly to actually buy the device. The
Amazon Fire is threatening to
become the Amazon Fizzle.
On Monday, Amazon took a dras-
tic step to avert disaster, announcing
that it would charge 99 cents for the
phone, basically giving it away if
users signed a two-year contract with
AT&T, the exclusive carrier.
Amazon has money to burn, and
a relentless determination. But some
analysts still wonder if a price drop of
almost $200 was enough.
If history is any indication, this
doesnt usually work, said Wayne
Lam, an analyst with IHS
Technology. He noted that the so-
called Facebook phone quickly
dropped to 99 cents last year but nev-
er gained a foothold in the market.
The price cut gets the Fire
phone closer to the companys clas-
sic model of giving away hardware
in the expectation that users will
order enough from Amazon to
make it worthwhile. Buyers of the
phone still get a year of free Prime,
Amazons shipping and video club,
which normally costs $99.
The Fire, released in late July, is
an expensive venture for Amazon.
Thousands of employees worked on
it for four years. Analysts initially
expected sales of one million to two
million units in the first year.
That is not much in the smart-
phone universe. Apple, which is
releasing its new iPhones on
Tuesday, surpasses that every week.
But the Fire was nevertheless unlike-
ly to get anywhere near its forecast in
its initial incarnation.
Amazon does not release sales
numbers for its devices and
declined to comment for this arti-
cle. An AT&T spokesman also
declined to comment on sales.
But at three Bay Area AT&T
stores over the weekend, salesmen
said that the Fire had performed
dismally. We got special shirts,
staffed up for the launch and
then nothing, said one salesman,
who estimated his store had sold a
total of 10 Fire phones. At a small-
er store, two salesmen said they
had sold exactly one Fire.
We had modest expectations,
and the phone seems to be shy of
those, said Gene Munster, an ana-
lyst at Piper Jaffray. But the price
cut and an aggressive ad campaign
will make a difference. The Fire
was searching for a feature and just
found it: a low price, he said.
Chitika Insights, an analytics
firm, analysed hundreds of millions
of web page views from United States
and Canadian smartphone users to
compare the first month of the Fire
phone with the April debut of the
Samsung Galaxy S5 from AT&T.
After 20 days, Amazon Fire
phone users generated close to 0.02
per cent of North American smart-
phone Web traffic, Chitika said, and
then stalled. The Galaxy phone had
17 times more traffic than that.
2014 The New York Times News Service
THE FIRE FALL
| After 20 days of its debut, Fire phone users generated close to 0.02% of
North American smartphone Web traffic, whereas the Galaxy phone had
17 times more traffic than that
| As of Monday afternoon, the basic Fire phone, the 32GB, lagged two of
Samsungs Galaxy S5 phones on Amazons contract phone best-seller list
| The 64GB Fire was ranked No. 53
| The phone was briefly ranked near the top when it was announced but
is now nowhere at all
| It has fallen from the most-wished-for electronics item to No. 20
| At 99 cents, Amazon is basically giving the smartphone away if users
sign a two-year contract with AT&T
| Buyers of the phone still get a year of free Prime, Amazons shipping and
video club, which normally costs $99
Jeffrey P Bezos, Amazons founder and chief executive, announcing
the Fire phone in June. PHOTO: AP/PTI
Heres whythe Amazons first smartphone, the Fire, is threatening
to become the Amazon Fizzle
Amazon cuts smartphone
price by $200 to 99 cents