About three months since it introduced the Fire Phone, Amazon is admitting mistakes that it made with the launch of its first-ever smartphone.
In an interview with Fortune, David Limp, Amazon's senior vice president of devices, said that his company had priced the Fire Phone incorrectly.
"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."
Amazon's traditional pricing strategy is to undercut rivals. However, it went a different route with the Fire Phone, opting instead to base the price on the industry standard.
The Fire Phone was originally priced at $299 for the 64 GB model and $199 for the 32 GB model. Last September, Amazon reduced the price of the device from $199 to 99 cents. Limp claims that the large discount helped boost sales.
While the price cut may have renewed interest in the Fire Phone, overall sales numbers remain weak. In an interview last week, Amazon CTO Tom Szkutak disclosed that his company has $83 million worth of unsold smartphones in stock. In a recent earnings call, Amazon also said that it took a $170 million hit, mostly due to losses from the Fire Phone. While the smartphone has been largely regarded as a flop, other Amazon products, such as the Fire tablet and Fire TV streaming box, are said to be generating strong sales, even though Limp declined to provide precise sales numbers.
In spite of the device's weak debut, Amazon pledged to stick with its new smartphone brand. In fact, the company pledged to continue providing support for the device. "When you're taking risks, they're not all going to pay off ... Those are the facts," said Limp.
Amazon is reportedly taking a long-term approach with the Fire Phone, similar to its strategy with its Kindle readers. Limp claims that the two software updates his company released for the Fire Phone solved issues early users were having with the device.
"We are going to keep iterating software features to get it better and better," said Limp. "Each release that we're doing, we're learning. Beyond that, I leave it out there to see what people think."
