Fire Sale: Why Amazon's Much-Hyped Phone Flopped
Why a $199 phone is being sold for 99 cents.
— -- Amazon's much-hyped Fire phone didn't even create a spark in the smartphone market.
Four months after its debut, the device, which featured what Amazon called "breakthrough" technology, is now selling on Amazon for 99 cents with a contract -- placing it at about the same price point as a fast food hamburger.
Amazon revealed in its quarterly earnings call on Thursday that it took a charge of $170 million for the "inventory evaluation and supplier commitment costs" for the Fire, according to the Associated Press.
Furthermore, the company said it had about $83 million worth of the phones left over at the end of quarter, the AP reported.
Where Amazon went wrong was creating a device geared toward drawing in new Amazon shoppers, according to Patrick Moorhead, principal technology analyst at Moor Insights and Strategy. He said the smart phone and Amazon were a classic case of a "brand mismatch."
"I think that Amazon was more interested in monetizing its buyers than actually delivering a compelling experience," Moorhead told ABC News.
The Fire phone is equipped with a feature that allows users to identify almost any product -- from a book to a game or a container of kosher salt. It then directs users to Amazon to make purchases.
The 3-D display, ideal for game play, was touted by Amazon as another breakthrough feature of the phone. From Moorhead's perspective, it's one place the company had a chance to shine but executed the technology entirely the wrong way.
"I could imagine on a 10-inch tablet playing some really cool 3-D games, but their display was too small," he said. "It was the wrong platform."
Reviews of the Fire phone, which averages about 2-stars on Amazon, range from "extremely sad and dissatisfied" and "I wanted to love you" to "five stars."
Thomas Szkutak, Amazon's chief financial officer, said on the earnings call that the company has to be "selective" in taking new projects.
"We certainly have been in several years now of what I will call in investment mode," he said. "There's still lots of opportunity in front of us but we know that we have to be very selective about which opportunities we pursue."
Despite the dismal news, Amazon reported a revenue increase of 20 percent to $20.6 billion. However, even that fell short of analysts' expectations.
The Associated Press contributed to this report.