The Ups And Downs Of The Amazon’s Fire Phone
Amazon, employs over 798,000 people, with 175 fulfillment centers spacing out at more than 150 million square feet. Amazon has come a long way from its first garage sale in 1995. As successful as Amazon is, they have had their failures along the way, teaching valuable lessons. So what lessons can they learn from their Fire Phone?
In the mids of 2010 Amazon started an ambitious project to build its first smartphone. With the goal of building something spectacular for the end customer, work started. After 4 years of brainstorm and prototypes, they introduce the Amazon Fire Phone. The Fire Phone was introduced in Seattle, at a press event that was held by Jeff Bezos. Jeff started off with a question,
“Can we build a better phone for Amazon primer members?”
Amazon was entering the market that was led by companies such as Apple with their iPhone 5s and Samsung with the Samsung S5. The major feature announced was its unique 3D UI dubbed Dynamic Perspective with four front-facing cameras and the gyroscope to track user’s movement — the OS adjusts the UI so it gives the impression of depth in 3D. Some other features on the phone included the X-ray, for finding information about media and the 24-hour customer service tool. It also had the Firefly, which automatically recognized text, sounds, and objects. Beyond the basic features, the Fire Phone had the option of unlimited photo storage. With Aluminum milled buttons, the phone keys were 3 times more precise than their counterpart. All of these features sounded pretty cool for a phone that was $199 with 32 GB storage and a two-year contract.
25 days after releasing the phone, only 35,000 units were sold. The phone initially received mixed reviews but then, reviews on Amazon started to pop up, giving the phone a rating of 2.6 out of 5. Six weeks after introducing the phone in the market, the price was cut down from $199 to 99-cents with a two-year contract. And then in August 2015, the phone was listed, unavailable. Later it was reported that Amazon had discontinued the Fire Phone. Reports are that Amazon lost $170 million from its smartphone venture.
So what had happened? A smartphone is known for its incredible design and irresistible price. Although the design was impressive, it was not valued by customers. Reviews on Amazon said that the device was “forgettable” and “mediocre”. Then there was also the price tag, instead of pricing the phone at an affordable price, for which Amazon’s devices were known for, they had taken the standard route and offered the Fire Phone for the same price as their competitors. Amazon’s focus was to build a phone for their users, people buying on Amazon, it was a means to provide a more direct link to their customer. But was that really necessary? as Android and iPhone users could easily access their Amazon account without any problems.
Some say that Jeff Bezos was heavily involved in the design process, which is a good thing if you are the CEO, but somewhere along the line, the design team felt that they were designing a phone for Jeff himself, not the end customer. As big of a loss as it was, to their credit Amazon-owned their failure, Jeff said that his job is to embrace failure inside the company in pursuit of the big successes. So did all of Bezos’s risk-taking payoff? He has previously recovered from every failure, in an interview; he said that he likes to wonder, as wondering helps with innovation.
Amazon constantly looks for opportunities to improve and innovate their products. So, when the story of the phone seemed like a failure, lessons learned from this failure help them introduced a far more successful Amazon product, who has its roots in the Fire Phone: Amazon Alexa. Amazon Alexa is a virtual assistant AI technology developed by Amazon, capable of voice interaction, music playback, making to-do lists, setting alarms, and much more. Alexa was launched just four months after the release of the Fire Phone. A report from RBC Capital Markets says that Amazon’s Alexa could generate $18 to $19 billion, in sales by 2021. Isn’t this interesting, lessons learned from 170 million dollar loss, could potentially result in a revenue of 18 to 19 billion.
Jeff was once asked if he felt bad for the fire phone, he replied, “You can’t, for one minute, feel bad about the Fire Phone,” In many ways, the Fire Phone is the perfect symbol for Amazon. It represents the wild experiment, the willingness to take risks and to embrace failures. Understanding Amazon’s journey to create a smartphone, and why it failed, is perhaps the best way to understand the company’s mission and values.
