Amazon cuts the price of unlocked Fire Phone to $199

Image: Ted S. Warren/Associated Press

Aiming to fuel sales of its struggling Fire Phone, Amazon has cut the price again and is now throwing in a free year of Prime to try to unload the item as the holidays hit.

When Amazon launched the phone in July, it sold for $649 unlocked or $199 with a two-year contract. This week, Amazon cut the unlocked price to $199. The latest price cut, first reported by Re/code comes after Amazon had already knocked $200 off the price of an unlocked model. In September, it also cut the price with a two-year contract from $199 to $0.99.

Making the Fire Phone cheaper doesn't seem to have goosed sales. IDC reported earlier this month that the Fire Phone has garnered less than 1% market share in the U.S. for smartphones. The unsold inventory also prompted Amazon to take a $170 million charge in October. In addition, Amazon Senior Vice President of Devices David Limp told Fortune that there's another $83 million surplus of Fire phones.

Limp said Amazon initially bungled the pricing on the Fire phone, though he says that changed after September's price cut. 'We didn't get the price right,' Limp said. 'I think people come to expect a great value, and we sort of mismatched expectations. We thought we had it right. But we're also willing to say, 'we missed.' And so we corrected.'

Despite the poor sales, Jorrit Van der Meulen, vice president of devices for Amazon in Europe, told The Guardian that the company is sticking with the Fire Phone. 'In an honest assessment of the Fire Phone, we've learned a lot on this one,' Van der Meulen said. 'We're undeterred, but we're not immune to the criticism either.'

Meanwhile, Amazon's not the only phone maker to offer fire sale prices during the holiday season. BlackBerry is also, in effect, paying iPhone 6 owners $50 to trade in their phone for a BlackBerry Passport.

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