Amazon sale offers unlocked Fire Phone for $199

In the wake of feeble demand, Amazon is running another fire sale to try rid itself of unsold inventory.

James Martin/CNET

Amazon has cut the price of its sluggish-selling Fire Phone to try to persuade buyers to give the device a shot.

The 32GB unlocked version of the phone is now up for sale on Amazon's site for $199, a savings of $250 off the prior list price of $449. This marks the second time Amazon has dropped the device's full price as the Fire Phone initially hit the market unlocked for $650.

Launched this past July, the Fire Phone has failed to ignite much in the way of consumer interest or actual sales.

In October, Amazon reported a third-quarter loss of $437 million, significantly higher than the loss it took in the same quarter last year. As a result of the phone's poor sales, the company was forced to take a $170 million charge related to the write-down of costs associated with the Fire. That charge accounted for a hefty amount of the overall loss for the quarter. At the time, Amazon had about $83 million worth of unsold Fire Phones, according to Chief Financial Officer Tom Szkutak.

To try to drum up sales, Amazon cut the subsidized price of the phone in September. Initially available via AT&T for $200 with the standard two-year contract, the 32GB version of phone saw its price drop to just 99 cents. The subsidized price of the 64GB edition fell to $100, down from $300.

The Fire has faced a variety of challenges trying to lure customers. Timing was one factor as consumers in July were awaiting the launch of other potentially more enticing phones, such as Apple's Phone 6 and Samsung's Galaxy Note 4. The Fire Phone also failed to tap into the full array of Android apps as it restricted owners to a more limited app store.

Amazon also made an exclusive deal with AT&T to carry the phone in the US, limiting its accessibility. The Fire Phone itself is compatible only with GSM networks, such as those used by AT&T and T-Mobile, leaving Verizon and Sprint subscribers out of the loop.

'There are a lot of reasons it failed, but the key is that Amazon provided no good reason for consumers to buy it,' Avi Greengart, an analyst for Current Analysis, said in October.

One of Amazon's goals with the Fire was to provide a portal device through which shoppers could more easily buy other Amazon products and services. Toward that end, the phone itself includes a full year of Prime membership, which separately costs $99. Prime offers free two-day shipping, a large library of streaming videos, and access to Prime music.

Non-Prime members who wish to sign up for the service and buy the Fire would essentially get the phone unlocked for just $100. That sounds like a sweet deal. But with so many other smartphones competing in the marketplace, Amazon is likely to still face a rough time moving all those unsold Fire phones.


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