Amazon Cuts Pricing For Fire Phone, But Partners Say It Might Be Too Late

Amazon has slashed the price of its disappointing Fire Phone by $250 and is now selling the device for $199 unlocked, a move it hopes will spark holiday season sales.

AT&T, which started selling the Fire Phone in July for $199 with a two-year service contract, is now offering it for 99 cents under the same terms.

Solution providers CRN spoke with this week, however, don't believe the price cut will have much impact, even though Amazon is still offering a one year of Prime and unlimited cloud storage.

"While the price cut sounds significant, I don’t think the business case for that phone was solid in the first place," said Douglas Grosfield, president and CEO of Xylotek Solutions, an Ontario-based solution provider. "It was designed to be an effective sales tool for Amazon customers to access things on Amazon Prime, but unfortunately it didn’t take off and didn’t do well."

[Related: Amazon Reveals Costly Fire Phone Flop In Disappointing Quarter]

During Amazon's third quarter earnings call last month, CFO Tom Szkutak revealed that the company is taking a $170 million write-down ’primarily related’ to its unsold smartphones and supplier commitment costs. Amazon also said it still has over $83 million worth of unsold Fire Phone inventory.

AT&T was initially the exclusive carrier for the Fire Phone, but T-Mobile is now also selling it. Yet solution providers aren't expecting that this will boost sales of the device.

"They are not getting traction for this phone, and they are trying to at least entice people with the price point to try it out," said Stephen Monteros, vice president of business development and strategic initiatives at SIGMAnet, an Ontario, Calif.-based solution provider and Amazon partner.

"I think for a small segment of the market, for people on the bubble, it might work, but for wide spread adoption it won't work. Amazon obviously over estimated their potential or what people thought of them in the market. Their offering isn't exciting enough to get people to switch, but the price point would be an incentive to at least give it a shot," Monteros said.

Amazon, in its third quarter earnings last month, reported a net loss of $437 million, or 95 cents a share. It reported a loss of $41 million, or 9 cents a share, for last year's third quarter.

Amazon also said it expects to report a net loss of $570 million for its holiday quarter.