The fire sale of the Fire Phone, Amazon’s first smartphone, continues. On Tuesday night Amazon quietly cut the price again, this time bringing the entry-level 32GB model down to $199. That’s for an unlocked phone without a contract.
To recap: Amazon first launched the Fire Phone in June. It was priced at $649, or $199 with a two-year AT&T service deal. In September Amazon slashed its price to $450 off-contract, or free with an AT&T contract. Six months later, the week before Black Friday, the Fire Phone is down to less than a third of its original price, and people who pick one up can even use it on T-Mobile.
That’s not how you price a product that’s flying off the shelves. The Fire Phone, which initially advertised unique 3D effects as its main selling point, is most likely a bust. [company]Amazon[/company] is unlikely to ever announce official sales figures but it’s clear they wouldn’t be good up to this point: The company took a $170 million charge last quarter mainly due to unsold Fire Phone inventory.
At $200, the Fire Phone is still competing with impressive low-end Android smartphones like the Moto G. The Fire Phone comes with a free year of Amazon Prime, bringing the effective cost for some down to $100.
In many ways the bargain bracket is the right price range for Amazon’s smartphone. Amazon competes on price in its core e-commerce and cloud infrastructure businesses, and its line of Fire tablets have always been slightly less expensive than the competition. Even Amazon understands how odd it was that the Fire Phone was initially priced the same as an iPhone: SVP of devices David Limp told Fortune that Amazon “didn’t get the pricing right.”
At the same time, Limp indicated Amazon still plans to produce a sequel to the first Fire Phone. Maybe they’ll give that one away for free to Prime subscribers.