Will Amazon.com, Inc. (AMZN)’s Fire Phone Be Rescued by Price Reduction?


Amazon.com, Inc. (NASDAQ:AMZN) launching a smartphone in the name of Fire Phone, was not a surprise to many, but the fact that it was priced to compete with the likes of iPhone 5S and Galaxy S5 arose lots of concerns in the already competitive smartphone space. Fire Phone could only compete on the same level had it incorporated extraordinary features yet to be seen, on the already established brands in the market.

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AOL’s Ryan Block, in an interview on Bloomberg discussed about the sentiments of most of the analysts on Wall Street that the device is only doomed for failure at the current features and price point. The only way Amazon.com, Inc. (NASDAQ:AMZN) could have been successful with its smartphone is if it enjoyed fast mover advantage which it doesn’t have at the moment. Mind-blowing features could also have worked to the phones advantage or a price point that was quite enticing compared to other established brands according to the analyst.

“For Amazon.com, Inc. (NASDAQ:AMZN) to be successful, to differentiate properly, they need to do one of three things. They need to either, be lucky enough to have first mover advantage, which they clearly don’t have. They have to create something that is just so mind blowing that people absolutely can’t live without it, which I think this device is not that, or they have to compete on price,” said Mr. Block.

Concerns have already been raised’ on the phone’s inability to integrate some of Android apps that are common with other phones in the industry. The Timing of the Fire Phone release, according to Bloomberg’s Corry Johnson, suggests that Amazon.com, Inc. (NASDAQ:AMZN) might be willing to reduce the price of the smartphone as we near the festive season as a way of selling most of the phones with a view of adopting the price point, going forward.

“Its timing of this release that suggests that they may be willing to cut prices when they get to the fourth quarter, when they get to the holidays for they want to get out there and sell as many at this price point as they can and then adopt that price point overtime,” said Mr. Johnson.

The smartphone industry is one of the most competitive spaces in the market that is dominated by the likes of Apple Inc. (NASDAQ:AAPL)’s iPhones and Samsung’s Galaxy. Amazon.com, Inc. (NASDAQ:AMZN)’s Fire phone at its current price point is all but set to flop as very few people would make the switch from more established brands.

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