Before the Fire phone launched, people expected it to be dirt-cheap, a strategy that Amazon used with its line of Kindle tablets. Instead, the phone initially went on sale for $US199 with a two-year contract exclusively with AT&T.
But Efrati’s sources say Amazon originally planned to release a cheaper, carrier-agnostic smartphone, in addition to the higher end model. Amazon and HTC had reportedly been in talks to make a smartphone together that would be crazy-cheap (if not free) for Amazon Prime subscribers and available on any carrier, not just AT&T. Amazon would make the software and HTC, which has made leading smartphones in the past, would work on the hardware.
However, AT&T and Amazon had reportedly been talking about releasing Amazon’s in-house designed smartphone exclusively on AT&T since 2010. When AT&T found out about Amazon and HTC’s plan for a second phone, it allegedly threatened to withdraw its support for the original high-end model, Efrati’s sources said. At that point, Amazon told HTC that because AT&T objected, Amazon would no longer release a carrier-agnostic low-end phone.
By not releasing a lower-end smartphone available on all carriers with hardware made by an experienced company, Amazon may have seriously hurt its potential sales. The version it did release was mostly panned by the press and has had slow adoption since launch, according to the market research. Yesterday, Amazon slashed the price of Fire phone from $US199 to $US0.99 with an AT&T contract, but The New York Times writes that even that steep price drop might not be enough to get Fire phones off shelves.
Business Insider reached out to Amazon and AT&T for comment.
Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.
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