Amazon Cuts Fire Phone Price to Ignite Sales

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Amazon on Wednesday slashed the price of Fire mobile phones that stalled after launch early this year, becoming a drag on the US online retail titan’s bottom line.The price cut, which Amazon said would last until December 1, was the second for Fire and was included in a set of holiday-shopping season deals announced for items including Kindle ereaders.

Fire smartphones free of accompanying contracts with telecom carriers are available for $199 and come with a year-long membership to Amazon Prime subscription service which gives customers free shipping and access to music, videos and other online content.Amazon Fire phone hit the market mid-year at a price of $649 (roughly Rs. 39,500) each without contracts, or $200 (roughly Rs. 12,200) with multi-year telecom service deals.

Unlocked Fire phones are compatible with GSM networks provided by US carriers such as AT&T, T-Mobile, Metro PCS and Cricket.Seattle-based Amazon in September tried to ignite Fire sales by dropping the unlocked price to $449 (roughly Rs. 27,400), and offering handsets for just 99 cents if bought along with a two-year service contract with telecom carrier AT&T.

While some Amazon products and services have been popular, its smartphone market share has been “effectively zero,” according to the Consumer Intelligence Research Partners consultancy.

Amazon posted widening losses in the recently ended fiscal quarter, raising doubts on whether investors will support chief executive Jeff Bezos’ strategy of putting investment ahead of profit.

Amazon took a charge of $170 million (roughly Rs. 1,050 crores) for inventory, mainly for unsold phones.

Some analysts believe that the US holiday season will test Amazon because traditional brick-and-mortar retailers are responding to the competition with offerings such as free shipping.

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