Amazon.com Inc. (NASDAQ:AMZN)’s smart phone fails to attract users

Amazon.com Inc. (NASDAQ:AMZN) has seen a second disappointing quarter in a row. Thanks to the excessive spending on long-term projects and unexpectedly weak guidance for the holiday shopping season, the company missed its estimates and steadily went downhill during trade on Friday.

Another key point comes into light from Amazon.com Inc. (NASDAQ:AMZN)’s quarterly report; the phone Amazon Fire is officially a big failure. Many analysts foresaw that Amazon Fire will not compete in the highly competitive mobile phone market. While tech giants like Apple Inc. (NASDAQ:AAPL) and Samsung (NASDAQ:SSNLF) rule the smart phone market, it was highly unlikely that Amazon Fire would win the hearts of their customers. Amazon Fire lacked any value that would compel the users to give up their current smart phone and opt for the new Fire phone.

Amazon Fire was launched in June 2014 for $199 at AT&T (NASDAQ:T). In September, the phone’s on-contract price decreased to as low as 99 cents. However, Amazon.com Inc. (NASDAQ:AMZN) is known for secrecy and so, it wasn’t expected that full details of the Amazon Fire’s success or failure would be revealed in a report. In a conference call, Amazon.com Inc. (NASDAQ:AMZN) said that it has taken a write down worth $170 million for its unwanted smart phones’ inventory in the third quarter.

To make things worse, Amazon.com Inc. (NASDAQ:AMZN) is still carrying $83 million on its books for the smart phone’s inventory. With the huge success of iPhone 6 and 6 Plus, it is highly unlikely that Amazon.com Inc. (NASDAQ:AMZN) will offload their Fire phone inventory.

The real problem is that Amazon.com Inc. (NASDAQ:AMZN)’s smart phone strategy is not good enough; they do not fully appreciate why users buy smartphones. Amazon Fire is rooted in the business aims of Amazon.com Inc. (NASDAQ:AMZN). It does not have what smart phone owners want. This little key point makes a big difference in the market.

Amazon.com Inc. (NASDAQ:AMZN) believes that Amazon Fire’s core premise is good to go. Data from surveys has proven that millions of shoppers buy on mobile devices. Amazon.com Inc. (NASDAQ:AMZN) is a company whose fortunes are directly related to the success of their e-commerce platform. So, from their perspective, an opportunity to create a conduit that was always accessible to their customers, was a good opportunity.

Tablet was a more fertile ground for Amazon.com Inc. (NASDAQ:AMZN). Tablet transactions always occur in a larger number than those on mobile phones. Kindle Fire tablet series was a good success for Amazon.com Inc. (NASDAQ:AMZN). Unfortunately, the company failed to realize the differences between smart phones and tablets during the design and development of their Amazon Fire smart phone.

Amazon Fire incorporates an Android operating system, has a quite typical hardware design with no innovative features and lacks a cool factor. Is it a surprise that users shunned Amazon Fire? Not really. Amazon.com Inc. (NASDAQ:AMZN) already has a big inventory of Amazon Fire on its books and current sales are not increasing. The company will probably see another write down this quarter.