AT&T exclusivity stunting Fire Phone growth, study suggests

Consumer are adopting Amazon's flagship phone at a much slower rate than other smartphones, but that's to be expected, since it's only offered so far on AT&T, Chitika Insights says.

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James Martin/CNET

It's a good thing Amazon enjoys the long game.

While users are slowly warming up to the retail giant's new Fire Phone, its growth, in the short term anyway, isn't keeping up with competitors, according to a study published Tuesday.

The slow growth is likely a result of the company only offering the phone through a single carrier, according to research firm Chitika Insights, which tracked the phone's activity growth using ad impressions, or the number of times ads appear before a user.

The report doesn't measure the number of users. Instead, it gauges the popularity of the phone by the amount of activity from mobile web accessed through the phone. The Fire Phone study was based off of "tens of millions" of these ad views, across a network of 350, 000 websites. Amazon Fire Phone usage accounted for a small fraction, 0.02 percent, of that traffic within the first 20 days it was on sale.

A slow adoption rate will not surprise industry analysts who previously noted that Amazon's exclusive deal with AT&T to distribute the phone would severely limit the number of users who would buy the phone.

"The somewhat mild adoption of the Fire Phone may be seen as an expected consequence given the smartphone's carrier exclusivity," the Chitika study reads. "While Amazon certainly is looking to make the Fire Phone a hit, current conditions show this being more realistic as a long-term goal rather than a short term one."

Amazon tried to have a splashy launch for the phone, which it decked out with lots of buzzworthy features like 3D and image recognition technology, but the phone's reviews were generally tepid. The company took a big loss in the last quarter due mainly due to its aggressive investments, which included hardware like the Fire Phone. The company is known for investing heavily initially so it can reap profits down the road. It's pinned some of its long-term hopes on its phone, which is closely tied to the Internet retailer's ecosystem, making it easy to buy things from the mobile device.

But for Amazon to make the most of its no doubt pricey investment, the company may have to figure out how to lure more consumers.

In comparison to Chikita's findings of the Fire Phone, the adoption of the slightly more expensive LG G3, released about a month before on multiple carriers, reached 0.06 percent within its first 20 days. The Fire Phone costs $199 with contract, $649 without. The LG G3 costs $199 with contract, up to $684.33 without.

For more context, consider the performance of the Samsung Galaxy S4. Priced higher than the Fire Phone at its launch last year, the phone rose to 0.19 percent during its first 11 days, according to a previous study from Chitika.

Amazon is known for keeping its sales figures secret so it's difficult to know if Chitika's finding are an accurate portrayal of the phone's popularity, but it give some sense of the device's performance. Another company tracked the page views of the phone's pre-sale product pages shortly before the phone went on sale in July and noticed a sharp decline in visitors in the first month.

We reached out to Amazon for comment on this study and will update this post when we hear back.

 

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