As if Amazon.com's (AMZN 0.03%) Fire Phone wasn't doing badly enough, the beleaguered device is getting yet another promotion as exclusive carrier AT&T (T 1.47%) tries to clear out its inventory. That's particularly ominous since the Fire Phone was already discounted to $1 on contract last month.
How much lower can Ma Bell go? Can AT&T effectively pay you to take a Fire Phone off its hands? Sort of.
By heavily discounting an old, bundled tablet
AT&T has announced a new promotion that runs from October 24 through November 20, where customers can buy a 7-inch Kindle Fire HDX for $50 when bundled with a Fire Phone. That's a hefty $130 discount compared to the Kindle Fire HDX's typical $180 retail price, but also potentially the latest evidence that the Fire Phone has been an utter flop with consumers.
Buying the Kindle Fire HDX by itself costs $100 with a 2-year contract. The implied $80 discount is pretty small compared to the service charges over those 2 years, as stand-alone data plans start at $15 per month.
2 more gloomy data points
Earlier this month, Consumer Intelligence Research Partners, or CIRP, issued a press release, estimating Fire Phone adoption at 0%. However, it's worth noting that CIRP's research methodology entails surveying just 500 consumers, which may not be a statistically meaningful sample size to extrapolate over tens of millions of Amazon customers in the U.S.
It's probably not hard to find 500 people that haven't bought Fire Phone, but surely some customers have. Fire Phone adoption may be very, very low, but it's probably higher than 0%.
What's more relevant is that Amazon just disclosed a whopping $170 million inventory charge related to the Fire Phone last quarter. The company still has another $83 million of inventory leftover. These are about as official as it gets, since Amazon is unlikely to ever disclose actual unit sales.
Strings attached
Of course, the 7-inch Kindle Fire HDX itself is also aging at this point, released a year ago, so this is really an attempt to sell a new phone with an old tablet. On top of that, AT&T isn't offering this promotion purely out of the kindness of its heart or unmoving inventory.
Both devices require a standard 2-year contract, which also entail the typical cocktail of upgrade fees and such. Alternatively, the phone can be purchased with AT&T Next in lieu of a contract, but AT&T still has Next customers tethered with an installment plan.
Carriers have a history of attempting to subsidize tablets in exchange for service contracts, but customers similarly have a history of avoiding tablet subsidies since they pale in comparison to smartphone subsidies. Carriers don't subsidize tablets as much since tablets only carry data plans, unlike smartphones that also require pricey voice and text plans.
Good luck, AT&T.