Amazon may yet return to the smartphone market, despite the high-profile flop that was the Fire phone.
- An Amazon executive told The Telegraph that it needs to create a “differentiated idea” to be able to return to the market.
- Amazon’s first smartphone was a fiasco. The Amazon Fire phone was rolled out in 2014 and pulled a year later, resulting in a $170 million write off.
- Analysts say that creating a smartphone today would facilitate the growth of its Amazon Alexa services.
Amazon’s first attempt at creating and selling its own smartphone was ultimately a flop but it’s not ruling the market out altogether.
Dave Limp, senior vice president of devices and services at Amazon, told The Telegraph , that provided Amazon can create a “differentiated idea” for a smartphone, then it will make a second attempt at this.
“It’s a big market segment and it would be interesting,” he said. “We need to keep experimenting and the things we want to experiment with are the ones that are truly differentiated.”
He Limp: “The answer [to whether we’ll try another phone] is the same as to whether we’re going to build a personal computer. What we need to do in order to enter into something new is we have to have an idea to differentiate it.”
An Amazon spokesperson did not immediately respond to Business Insider’s request for comment to confirm whether this is already a work in progress.
BusinessInsiderAmazon Fire Phone
Just months after it was rolled out, the company admitted to taking a $170 million hit in its earnings because of the Fire phone and related supplier costs. It was also left with $83 million worth of unsold phones after it failed to take off, Fortune wrote at the time.
Limp initially blamed the phone’s flop on it being badly priced (its prices were later slashed ). But in comments since then, he has pinned its problems to the fact that Amazon didn’t create a product that was differentiated enough for customers. “It just didn’t resonate to the next level of masses,” he said in 2016 .
Last July , industry analysts began to speculate that Amazon could be developing smartphones once more after it dropped a hint in an earnings release. “We want customers to be able to use Alexa wherever they are,” Amazon said in the release.
“We suspect, though this is admittedly speculation, that Amazon will have to re-enter the phone market either directly or indirectly in order to drive Alexa adoption,” Benjamin Schachter, a technology analyst at Macquarie wrote in a note to clients at the time.
“We don’t see how Alexa can evolve to its fullest potential without being available prominently on the main device that so many people carry everywhere, the smartphone. It is hard to see how they don’t do this.”