Amazon has just released its financial results for Q3, which ended September 30, 2014. While net sales increased 20% to $20.58 billion, the company reported an operating loss of $544 million for the quarter. This is a massive change of fortune even when compared to the operating loss of $25 million from the same quarter in the previous year.
A big chunk of that operating loss comes from a $170 million charge related to the write-down costs associated with the Amazon Fire smartphone. The extent to which the smartphone has flopped was revealed by Amazon’s Chief Financial Officer Tom Szkutak during a conference call with investors.
We even took the bold step to publish a piece called ‘why the Amazon Fire phone will fail.’
Rumors that Amazon was working on a smartphone were rampant for several years and in June of this year the company finally revealed the device. However the handset failed to impress. It had solid specs, with a 2.2GHz Snapdragon CPU, 2GB RAM, an Adreno 330 GPU and an impressive sounding f/2.0 13MP rear shooter with OIS. It also had some interesting features with its Dynamic Perspective 3D system, Firefly technology, and the Mayday help service.
However, you could only download apps from Amazon’s Appstore. Amazon does the same thing with its Kindle Fire tablets, but for a tablet such a restriction is less of an annoyance, as long as the major apps are there, it isn’t a problem. But your phone is your “go to” device and Amazon was really asking you to invest in yet another eco-system, and consumers didn’t respond favorably.
Here at Android Authority we even took the bold step to publish a piece called “why the Amazon Fire phone will fail.” We don’t really like to blow our own trumpet around here, but we told you so.
The company has lots of cash and because of its diversity, Amazon is doing a lot of interesting (and hopefully profitable) things.
But it isn’t all bad news for Amazon. The company has lots of cash and because of its diversity, Amazon is doing a lot of interesting (and hopefully profitable) things. It just recently announced the new Kindle Voyage, Amazon’s thinnest e-book reader with the highest screen resolution in a Kindle reader to date. Amazon Fire TV is now the best-selling streaming box on Amazon for the U.S., U.K., and Germany. Away from hardware, Amazon Studios is commissioning new TV series which will be shown exclusively on Amazon Prime Instant Video. Then there is Amazon Web Services (AWS), AmazonFresh, Amazon Game Studios, and so on.
In other words, Amazon took a bet on the Fire phone, it failed, it cost a lot of money, but Amazon will keep on rolling forward.