Amazon Inc (NASDAQ:AMZN) Sells Only 35,000 Phones in July

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By Ross Schwartz on August 27, 2014 Technology & Software

While Amazon doesn’t release sales data for its own products and devices, analysts and experts in the industry suggest that the internet retailer’s brand new smartphone device has made only modest sales at best.

Amazon Inc (NASDAQ:AMZN)’s Fire Phone was released in July. The company attempted to hype up the device via numerous teaser videos and an extensive unveiling by Jeff Bozos, the chief executive officer of the company, who showcased the phone’s features like its 3D effect maps and multiple front facing cameras.

But how many Amazon Fire Phones have actually been sold since its release? How many are being used?

During the launch of the Fire Phone, there were multiple interesting abnormalities. The phone called for a price tag of $200 for a 32 gigabyte model on AT&T’s plan, which is the same price range as the iPhone 5S by Apple Inc (NASDAQ:AAPL) and the Galaxy S5 by Samsung (KRX:005930). This pricing was a surprising move by Amazon, since its other products, including the company’s Kindle and Kindle Fire tablets, are sold at a lower price point, classifying Amazon as a low-end distributor. Usually the internet retailer sells its hardware products at a loss, but later gains profits from the content.

Amazon provided the Fire Phone with a prime placement location on its website. Additionally, the company struck a deal with cellular service provider AT&T, the largest cell phone carrier in the United States, to sell its Fire Phone devices. However, sales results were still lackluster.

The internet retail giant is notorious for keeping its lips sealed about its sales figures for any of the gadgets and devices it sells. Rather, it announces its financial results, and lets those figures show the success of its devices. Analysts can use the information from sales channels and the guidance that the company may provide to make estimates of the number of devices the company has sold. However, these estimates are clearly not as definitive as the smartphone sales that Apple or BlackBerry (NASDAQ:BBRY) release in their financial reports. As of now, these are the only two companies that provide specific numbers for the sales of their devices in their financial reports. Apple takes it one step further by releasing the revenue from those sales as well.

However, we can estimate how many Amazon Fire Phones are being used through Chitika, which is a ad network manager.

According to Chitika, the activity on its ad network within the first 20 days of the release of the Amazon Fire Phone that was associated with the device accounted for only 0.02 percent of the ad network’s total activity. However, a more accurate graph shows the figure was only 0.0015%.

We can then use that number to take an educated guess at how many phones that equates to. Using comScore and the monthly data on smartphone users in the United States that it provides, we can estimate a close number.

The latest data from comScore shows metrics from three months ago to the end of June of 2014. Back then, there were 173 million smartphones being used in the United States.

According to comScore, that number is growing by 1 million to 2 million a month. So two months later in mid-August, when the data by Chitika was gathered, there would be about 175 million to 177 million smartphones being used in the United States.

We must also make the assumption that the Fire Phone will appear on Chitika’s network as often as any other smartphone device. Meaning that one Fire Phone being used will appear on Chitika’s network as often as one Galaxy phone being used or an HTC phone.

Based on the data from comScore, 0.015% of 175 million means that there were 26,250 Fire Phones being used. Then 0.015% of 177 million means that there were 26,550 Fire phones being used. Taking the median of these two values, we get 26,400 as a median number.

Devil’s Advocate

But what if Amazon’s Fire Phones are actually under-indexed in Chitika’s data? Meaning that they don’t appear on Chitika’s ad networks as often as other devices do because users of the Fire Phone are spending more time on Amazon.com buying products rather than surfing other parts of the web that Chitika displays ads on.

On the other hand, a release by Chitika in August suggests that the iPhone over indexes. In the report, iPhone web traffic clocked in at 52.3 percent, even though iPhones consist of only 40 percent of the smartphones being used in the United States.

As for Samsung, Chitika’s data on smartphone usage in the United States show that the company make up 26.4 percent of web usage. HTC consists of 3 percent of web traffic.

Given these figures, if the Amazon Fire Phone is under indexed by Chitika, it most likely isn’t by much.

Therefore, even providing room for some margins of error, it seems that there were less than 35,000 Amazon Fire Phones being used after the first 20 days of sales.

A representative from Amazon has not yet responded to a request for comment on these rumors.

So What Does This Mean?

Is 35,000 units a good or bad number? According to Bezos, Amazon is committed to this product for the long run, and states that patience is key. Chitika stated that despite Amazon’s intentions of making the new Fire Phone a hit gadget, the current situation suggests that this is more realistic as a long term goal rather than a short term one.

Analysts and experts in the industry stated that Amazon had to enter the eCommerce market through smartphones because it was concerned that it would disrupt itself as more online retail sales moved to apps.

So far, the Fire Phone looks more like a novelty than a winner.