Amazon's (NASDAQ: AMZN) Fire phone, its first smartphone, has been on sale for less than a month, but a new study from research firm Chitika Insights indicates that Amazon's deal to sell the phone exclusively through AT&T Mobility (NYSE: T) is hampering its sales.
The research firm notes that while the Fire Phone was listed atop Amazon's Best Seller list for several days in early August, its research suggests that North American usage of the device has grown only incrementally, rather than exponentially, in the three weeks following the device's launch.
Chitika Insights analyzed tens of millions of U.S. and Canadian smartphone-based online ad impressions generated within the Chitika Ad Network from July 25 through Aug. 14. The company also looked at post-launch usage growth of two competitor flagship smartphone models: Chitika looked at adoption of the LG Electronics G3, which received a staggered release across all four Tier 1 carriers beginning on July 11. Chitika also mapped out its results against the launch of the Motorola Mobility Droid Ultra, which was released on Aug. 20, 2013, as a carrier-exclusive device for Verizon Wireless (NYSE: VZ). Chitika mapped data for the 20 days directly following each smartphone's respective U.S. launch date.
The research firm found that usage rates of the LG G3 jumped relatively sharply following its release, especially once Verizon and Sprint (NYSE: S) started offering the device on July 17 and 18, respectively. The Fire phone's usage growth, however, remained steady but relatively flat over the same post-launch time period.
An AT&T spokesman declined to comment and representatives from Amazon did not immediately respond to a request for comment.
The G3 likely benefited from being launched by multiple carriers as well as LG's long-standing position in the U.S. smartphone market, while Amazon launched on only one carrier and is introducing new features in its smartphone that many consumers are unaccustomed to, such as a 3D user interface called Dynamic Perspective and a service called Firefly that lets users identify and buy things. The Fire phone costs $199 with a two-year contract or sells for 24 monthly payments of $27.09 through AT&T's Next handset upgrade program.
However, usage growth of the Fire phone tracked more evenly with that of the Droid Ultra, albeit at a slightly slower pace, which can perhaps be explained by Verizon customers' familiarity with the Droid brand. In that context, Chitika noted, the somewhat mild adoption of the Fire phone could be seen as an expected consequence given AT&T exclusivity.
To clarify, tracking ad impressions to measure adoption is an imprecise way to track sales. And Chitika graphed its results on the basis of a 48-hour rolling average.
Reviewers seemed to conclude last month that the Fire phone's headline features are interesting but gimmicky. One of the phone's standout features is Dynamic Perspective, which is intended to make navigation easier; the UI also recognizes where a user's head is relative to the device and lets users tilt the phone to scroll through information or get more details in apps. The technology uses four cameras on the front of the Fire Phone to constantly track the user's head. Yet reviewers found the feature to be mostly pointless.
Amazon CEO Jeff Bezos has left open the door of bringing the phone to international carriers, but nothing has been announced yet. Further, Bezos has said it will take time to build up Amazon as a smartphone player.
"Our job is to build the greatest device we know how to build and then customers will choose," he told Re/code in an interview in June. "The other job we have is to be patient."
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