Report: Amazon to release Fire phone successor - but not until 2016

Amazon (NASDAQ: AMZN) has been developing a sequel to its Fire smartphone but will not debut the new model until 2016, according to a VentureBeat report.

The report, citing unnamed sources close to the matter, said Amazon has been working on the new phone for months, but the team working on the phone has "gone back to the drawing board" in the wake of the weak sales of the initial phone, one source said.

Amazon representatives did not immediately respond to a request for comment.

As the report notes, if Amazon skips an opportunity to release a new phone before the holiday shopping season in 2015, that would suggest the company is engaging in a significant amount of reworking of the Fire phone or the entire concept of Amazon launching a phone. Most smartphone makers tend to release a flagship phone once per year.

Earlier this month Amazon CEO Jeff Bezos defended the Fire phone as a "bold bet" that has not yet paid off, but is part of a culture of experimenting and risk taking at the retailing and commerce giant. Bezos indicated that future iterations of the phone would be coming but declined to give details or a timeline.

Bezos, speaking at Business Insider's Ignition conference, said "it's going to take several iterations" before he'll be able to evaluate how successful the Fire phone has been in the market. "Ask me in some number of years," he said, according to Re/code.

Amazon said in October that it would book a write-down charge related to unsold Fire phone inventory and supplier commitment costs of $170 million. At the end of the third quarter the company had around $83 million worth of Fire phone inventory on hand. Professional reviewers generally found the Fire phone's main features interesting but gimmicky and not enough to justify its price. Amazon will either need to shake up its pricing for its next smartphone or add in features that are both new and wanted--or both.

Amazon exclusively partnered with AT&T Mobility (NYSE: T) on the phone and charged a very traditional $199 for the 32 GB model and $299 for the 64 GB version with a two-year contract when it went on sale in July. In early September Amazon dropped the price of the Fire phone to 99 cents with a two-year contract with AT&T.

"With the phone I just ask you to stay tuned," Bezos said.

"People love to focus on things that aren't working. That's fine, but it's incredibly hard to get people to take bold bets," Bezos said at the conference, according to Wired. "And if you push people to take bold bets, there will be experiments … that don't work."

However, a key difference between Amazon's phone and tablet is that the smartphone market is maturing and is dominated by companies that are heavily invested in it, especially Samsung Electronics and Apple (NASDAQ: AAPL)--and Amazon is late to the game.

For more:
- see this VentureBeat article

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