Amazon cuts Fire phone price to heat up sales

Amazon.com cut the price of its Fire smartphone to 99 cents with a two-year contract through AT&T, seeking to boost adoption of the device six weeks after it went on sale.

The 32-gigabyte phone previously cost $199 through AT&T, the exclusive wireless carrier for the device and the second-largest mobile carrier in the U.S. The Fire phone comes with 12 months of free membership to Amazon Prime fast-delivery and media-streaming services, the Seattle-based company said in a statement on Monday.

Amazon slashed the price of the Fire handset a day before Apple held an event where the iPhone maker announced bigger-screen phones, people with knowledge of the matter remarked. Competition in the smartphone industry is intensifying, leading to reduction in prices for some phones that aren’t selling as well. In May 2013, AT&T said it was considering whether to stop selling an HTC phone that integrates Facebook social-networking features after cutting the price to 99 cents.

Amazon doesn’t release information about the number of phones it has sold, said Leslie Letts, a spokeswoman for the Seattle-based online retailer.

Brian Blau, an analyst at Gartner, said Amazon’s price cut stands out because the drop was so steep and came so soon after the product’s debut. Such price reductions typically happen more gradually, he said.

“This isn’t a good sign for Amazon, but they aren’t ones to give up,” Blau said. “This was just not the right phone with the right features at the right price.”

The Fire, which went on sale in the U.S. on July 25, lets users capture information from items such as business cards and paintings. Bloomberg