Because nothing says “Our new product is selling great!” like dropping its price down by 99.5% two months after launch, Amazon has dropped the price of the Fire Phone from $200 to 99 cents. Before you head over to Amazon with nothing but a lone Washington in hand, remember: it’s 99 cents with a 2-year contract, and it’s only available on AT&T. At AT&T’s current cheapest monthly rate ($60), that $1 phone really ends up costing you closer to $1,441. Without the service plan, the 32GB Fire Phone still costs $449.
Sixty thousand people vied to attend the unveiling of Amazon’s first smartphone in late June. If only the retailer could persuade those fans — or anyone, really — to actually buy the device. The Amazon Fire is threatening to become the Amazon Fizzle. On Monday, Amazon took a drastic step to avert disaster, announcing that it would charge 99 cents for the phone, basically giving it away if users signed a two-year contract with AT&T, the exclusive carrier. Amazon has money to burn, and a relentless determination. But some analysts still wondered if a price drop of almost $200 was enough. “If history is any indication, this doesn’t usually work,” said Wayne Lam, a senior analyst with IHS Technology. He noted that the so-called Facebook phone quickly dropped to 99 cents last year but never gained a foothold in the market. The price cut gets the Fire phone closer to the company’s classic model of giving away hardware in the expectation that users will order enough from Amazon to make it worthwhile. Buyers of the phone still get a year of free Prime, Amazon’s shipping and video club, which normally costs $99.
