Analyst: Amazon's Fire Phone Simply 'Not Compelling Enough'

Updated 4:00 pm ET

Amazon unveiled its Fire Phone with much fanfare in June, but after only two months on the market, the company has dropped the price of the $199 32-gigabyte model to 99 cents, with a two-year contract. The 64-gigabyte version, originally priced at $299 is now $99, according to a release from Amazon.

Customers who bought phone at the initial price can speak with customer service if they are interested in a rebate, and those who purchase the phone now can still get a free 12-month Amazon Prime membership, though for a limited time. The announcement comes amid anticipation of Apple's latest big event and hype around the iPhone 6.

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Of the price slashing, Tuong Huy Nguyen, a principal research analyst at Gartner told Entrepreneur.com that "any kind of fire sale is meant to generate volume." The promotion seems to be working for the moment. The 32G Fire Phone is currently number one on Amazon's list of bestselling contract phones, while it previously was behind the Samsung Galaxy S5, though on the site's most "wished for" list, it sits at no. 18 spot.  

Nguyen thinks that while the phone was a "solid offering" in terms of hardware, he believes that it had trouble gaining traction with customers because ultimately, "given the already high rate of smartphone ownership in the U.S., consumers need an extremely compelling [reason to buy]. The features of the device were not compelling enough to do this." Additionally, the phone's Android platform meant that the apps consumers can use are "essentially a subset of what’s already available to Google Play users."

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However, even though the Fire Phone hasn't made as strong a showing as Amazon may have hoped, Nguyen foresees the potential of some of the innovations that came out the phone's four-year development, such as the interface's Dynamic perspective and features like the content recognizing app Firefly. "I still hope to see these types of functionalities integrated into the broader market [and] other devices across all vendors," he says.  

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