This Problem Could Kill the Amazon Fire Phone

By Markets Fool.com

To say theAmazon Fire Phone has struggled would be an understatement to the effect of saying Johnny Manziel did not quite live up to the hype during his first season in the National Football League.

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In reality, the Fire Phone failed spectacularly with estimated sales of "no more than 35,000," according to detailed analysis fromCharles Arthur at The Guardian. The company also took a $170 million write-down because of costs associated with the device. CFO TomSzkutak even admitted during anearnings callthat the company had roughly $83 million worth of unsold Fire Phones sitting in a warehouse, despite the fact that the device has been on sale for a contract price of just $0.99.

Despite these failures, Amazon CEO Jeff Bezos has remainedcommittedto creating future iterations of the Fire Phone.

"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. And if you push people to take bold bets, there will be experiments [...] that don't work," Bezos said at the annualBusiness InsiderIgnition conference In December 2014.

At that event, Bezos would not specify when his company would release another phone, but he did imply that it would.

"It's going to take many iterations. I don't know. Ask me in some number of years," Bezos said.

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The problem for the CEO, however, may be bigger than consumers rejecting the first Fire Phone. That failure may be compounded by the fact thatGeekWireis reporting that many developers whomade appsfor thefirst Fire Phone "aren't planning to build apps for future versions of the device."

Why this matters
The Fire Phone runs on a customized version of Android in the same way the Kindle tablets do. At launch, that made it impossible to install theGooglePlay store with its over 1.3 million apps. By comparison, the Amazon app store contains under 250,000 apps, according toStatista,and many of those are specific to the Kindle lineup.

It is now possible for reasonably tech-savvy users to get around this limitation and install Google Play on the Fire Phone. "Possible" does not mean "easy" though, and it seems unlikely too many users drawn to an Amazon phone will be familiar with implementing legal, but perhaps not ethical, workarounds like the one detailed here.

Of course, while access to the Google Play store greatly increases the apps offered on Fire Phone, what Amazon really wants is dedicated apps designed to take advantage of its unique technology.

Amazon Fire Phone. Source: Amazon

What are the developers saying?
GeekWire spoke to a number of developers anonymously, and most of them had essentially the same response -- developing for Fire Phone is too much time and effort for too limited an audience.

"I don't think anyone is excited about developing for [the next Fire Phone]," one developer told the technology news site. "It sure isn't on our priority list right now since version one is sucking wind."

Essentially, Amazon has the same problemMicrosoftencountered with its Windows phones. There are simply too few users on the platform to make it worthwhile for developers, compared to the Android and Appleuniverses. Of course, there is also less competition in the Fire Phone app store, but being No. 1 in a 35,000 person community may not be as important as being No. 15,532 in the Google or Apple app stores.

What happens next?
If Amazon wants to move forward with a second Fire Phone, the company needs to keep developers on board -- not just to port apps over but to keep them as fresh as those on the more popular platforms. The easiest way to do this (and it is a tactic Microsoft has employed) is to pay top app creators to make their products available for Fire Phone.

This makes sense specifically when it comes to getting developers to create apps that use unique features on the device, which include a sort of 3D display.

A second strategy would be to pay for custom apps but also make a deal with Google for direct inclusion of Play on all future Amazon phones. That means giving away control (and some revenue), which Amazon has traditionally not done with its devices, but it is the only way to ensure that the company has the critical mass needed for the Fire Phone.

Apps are certainly not the only obstacle to Amazon succeeding in phones, but it is one that could stop Fire Phone 2 from ever happening if not addressed.

The article This Problem Could Kill the Amazon Fire Phone originally appeared on Fool.com.

Daniel Kline owns shares of Apple and Microsoft. The Motley Fool recommends Amazon.com, Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.