The Amazon Fire Phone Was Always Going to Fail

Amazon CEO Jeff Bezos holds up the new Amazon Fire Phone at a launch event in Seattle, June 18, 2014. Ted S. Warren/AP

The Amazon Fire Phone is a flop. Last quarter, the company’s worst in years, Amazon took a $170 million loss on the tepidly-reviewed device.

In a new, deeply reported piece for Fast Company, tech journalist Austin Carr tells the inside story of how the Fire Phone debacle unfolded. It’s a fascinating tale of how the seeds of failure were planted. But in a way, regardless of any bad management decisions, self-destruction was embedded in the Fire Phone’s DNA from the beginning. The project was doomed from the start, because the only one who really needs an Amazon phone is Amazon.

“As the world goes mobile, an Amazon phone would provide a more direct link to its users,” Carr writes. But to whom is that connection truly useful? Android and iPhone users can connect to Amazon well enough through the devices they already have.

Carr observes that, by not controlling the hardware, Amazon runs into problems like the 30-percent cut Apple takes of in-app sales. The company doesn’t sell e-books through its Kindle iOS app for that reason, and yes, that’s inconvenient for users. But it’s not a reason for people to buy a whole new phone. The bigger inconvenience lies with Amazon.

Overcoming a competitive disadvantage does not in itself suffice as a premise for any new product, much less one as integral to users’ lives as a smartphone. As Facebook discovered with the lackluster embrace of Home, its “apperating system” that acted as an OS-like skin for Android handsets, a killer app doesn’t make a killer phone. Amazon is incredibly useful, and as a funnel for both commerce and content, it can lay claim to many of the things we do on our phones. But not all of them.

Not Cool

To justify its existence, a smartphone has two options: incredible design or irresistible price. The Fire Phone had neither Apple and its superior design prowess own the premium segment of the smartphone market, while the competitive jostling on the budget end has led to dynamic upstarts like Xiaomi. If Amazon from the start had imagined the Fire Phone as, say, another free perk for Amazon Prime members, it could have slipped a sleek shopping engine into tens of millions of pockets.

Instead, as Carr describes it, Amazon CEO Jeff Bezos dove deep into the design process in a doomed effort to win on ill-conceived features like the Fire Phone’s 3-D display. Originally priced at $199 with contract, the Fire Phone cost the same as an iPhone, suggesting Bezos saw his baby as a rival to Apple’s market-defining product. The miscalculation is all the more baffling considering Amazon seems to have taken the opposite tack with its Kindle Fire tablets, which work as a concept because they serve mainly as portals for Amazon content while costing much less than iPads.

From the time he founded the company in the mid-’90s, CEO Jeff Bezos has fostered a quasi-religious culture at Amazon with “the customer” as the ultimate object of worship. This relentless focus has led to revenue-spewing crowd-pleasers such as Prime. But according to Carr, Bezos saw the Fire Phone as a chance to scratch another itch that had long bothered him. He has succeeded dramatically by putting customers first. But he also wants Amazon to be cool.

Amazon is a lot of things—convenient, industry-crushing, hyper-efficient—but “cool” is not one of them. Jeff Bezos is also a lot of things—driven, brilliant, ruthless—but he doesn’t exactly radiate “cool,” either. And that’s totally fine. Amazon is already so overwhelmingly, dominantly good at the main thing it does, selling stuff online, that being cool doesn’t really matter. The world is already full of people trying to be cool, an effort that seldom works out well in the end. Instead, it apparently leads to stacks of unsold phones gathering dust in warehouses. So uncool.