Get All Access for $5/mo

So What If Its First Phone Flopped? Amazon Is Keeping the Fire Alive Anyway. Once burned, twice shy doesn't apply. Amazon's not tapping out of the smartphone market just yet.

By Kim Lachance Shandrow

Opinions expressed by Entrepreneur contributors are their own.

amazon.com

Amazon played with Fire and it got burned. Really burned. But not enough to tap out of the sizzling smartphone market.

The Seattle-based ecommerce heavyweight had high (and hyper-hyped) hopes for its first branded handset. But the Fire phone didn't catch fire with consumers. Quite the opposite: It landed with a thud and ended up a two-star dud on its own website. Yikes.

Only four months post-launch and shortly after deeply slashing prices, Amazon is now stuck with stacks and stacks of the smartphone that nobody wanted -- $83 million worth, to be exact. If that's not ugly enough, Amazon CTO Tom Szkutak also admitted last week that the company had to swallow a painful $170 million write-down pill last quarter, "primarily related to Fire Phone inventory valuation and supplier commitment costs." Just what a perpetually profit-allergic business needs. (The company reported a Q3 operating loss of $544 million.)

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

Still, some fires aren't so easily put out, catastrophic flops included. Not at Amazon. Yesterday David Limp, the tech giant's senior vice president of devices, told Fortune that Amazon isn't giving up on the Fire phone any time soon. It will hang tough and stay the course, just as it did with its inaugural and initially poorly received Kindle e-reader in 2007.

"We are going to keep iterating software features to get it [the Fire phone] better and better," Limp said. "Each release that we're doing, we're learning. Beyond that, I leave it out there to see what people think."

Limp blamed the Fire phone's price tag for its lukewarm reception. "We didn't get the price right," he told Fortune. "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."

Related: Amazon Drops $970 Million on Game on Game-Streaming Service Twitch

After just two months on the market, Amazon 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.

Limp didn't spill any juicy details about future Fire phones, but said Amazon will continue to spiff up the existing model with software updates. Will a few software patches be enough to rekindle a love affair with consumers that never existed in the first place? We doubt it.

Related: Furthering Its Goal to Get Physical, Amazon to Open West Coast Pop-Up Shops

Kim Lachance Shandrow

Former West Coast Editor

Kim Lachance Shandrow is the former West Coast editor at Entrepreneur.com. Previously, she was a commerce columnist at Los Angeles CityBeat, a news producer at MSNBC and KNBC in Los Angeles and a frequent contributor to the Los Angeles Times. She has also written for Government Technology magazine, LA Yoga magazine, the Lowell Sun newspaper, HealthCentral.com, PsychCentral.com and the former U.S. Surgeon General, Dr. C. Everett Coop. Follow her on Twitter at @Lashandrow. You can also follow her on Facebook here

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business Solutions

Increase Productivity with This Microsoft 365 Subscription, Now $25 Off

It can make the entrepreneur life a lot easier.

Business News

Apple Pay Later Is Ending. Here's What's Taking Its Place.

The program was available for less than a year.

Leadership

This Artist Answered a Businessman's 'Powerful' Question — Then His Work Became 'the Poster Child for Juneteenth': 'Your Network Really Becomes Your Net Worth'

Reginald Adams was the executive director of a Houston-based art museum for more than a decade before he decided to launch his own public art and design firm.

Leadership

Harvard Business School Professor Says 65% of Startups Fail for One Reason. Here's How to Avoid It.

Team alignment isn't nice to have -- it's critical for running a successful business.

Business News

Here's What Companies Are Open and Closed on Juneteenth 2024

Since it became a holiday in 2021, Juneteenth has been recognized by some major corporations as a paid day off.

Growing a Business

I Hit $100 Million in Annual Revenue by Being More Transparent — Here Are the 3 Strategies That Helped Me Succeed

Three road-tested ways to be more transparent and build relationships that can transform your business — without leaving you feeling nightmarishly over-exposed.