With all the smartphones on the market it’s a wonder that companies have come out with new ones. Amazon CEO Jeff Bezos, in an article with FierceWireless, discusses their reasoning behind releasing a smartphone in an already crowded market.
Amazon CEO Jeff Bezos defended the company’s first smartphone, the Fire phone, as a “bold bet” that has not yet paid off, but is part of a culture of experimenting and risk taking at the retailing and commerce giant. Bezos indicated that future iterations of the phone would be coming but declined to give details or a timeline.
Bezos, speaking at Business Insider’s Ignition conference, said “it’s going to take several iterations” before he’ll be able to evaluate how successful the Fire phone has been in the market. “Ask me in some number of years,” he said, according to Re/code.Amazon disclosed in October that it would book a write-down charge related to unsold Fire phone inventory and supplier commitment costs of $170 million. At the end of the third quarter the company had around $83 million worth of Fire phone inventory on hand.
“People love to focus on things that aren’t working. That’s fine, but it’s incredibly hard to get people to take bold bets,” Bezos said during an interview with Business Insider CEO Henry Blodget, according to Wired. “And if you push people to take bold bets, there will be experiments … that don’t work.” (Bezos is an investor in Business Insider and Blodget is also a long-time investor in Amazon.)
Amazon exclusively partnered with AT&T Mobility on the phone and charged a very traditional $199 for the 32 GB model and $299 for the 64 GB version with a two-year contract when it went on sale in July. In early September Amazon dropped the price of the Fire phone to 99 cents with a two-year contract with AT&T.
“With the phone I just ask you to stay tuned,” Bezos said.
Professional reviewers generally found the Fire phone’s main features interesting but gimmicky and not enough to justify its price. Firefly is a key feature on the phone that identifies more than 100 million different items, including books, music and TV episodes, and lets users purchase them with the click of a button through Amazon. The feature has interesting functionality–letting users go to the StubHub app to buy tickets to a concert based on a song that is playing, for instance. However, reviewers found Firefly couldn’t consistently recognize what’s in front the phone’s camera, for example.
More broadly, Bezos said if Amazon is not experimenting and having flops along the way it is not innovating. “My job is to encourage people to be bold,” he said, according to Fortune.
“I’ve made billions of dollars of failures at Amazon.com,” he continued. “Literally billions. …Companies that don’t embrace failure and continue to experiment eventually get in the desperate position where the only thing they can do is make a Hail Mary bet at the end of their corporate existence. I don’t believe in bet-the-company bets.”
Despite the dismal sales of the Fire phone, Amazon still brings in billions in revenue, not only from retailing but from its Amazon Web Services cloud computing and storage business. “A few big successes compensate for dozens and dozens of things that didn’t work,” Bezos said, according to CNET, noting Amazon’s gains from its Kindle e-reader, data center business and third-party online marketplace. “Bold bets…pay for a lot of failures.”