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The Fire Phone looks set to burn HTC at the worst possible time

Published Jun 23rd, 2014 5:35PM EDT
Amazon Fire Phone Vs. HTC One M8

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It’s no surprise that the $200 Amazon Fire Phone is now the No. 1 on-contract phone at, outselling all Samsung models one month before its official launch. But it’s a bit of a shocker that the $300 Fire Phone model with 64GB of memory is the No. 2 phone. American consumers have started showing signs of becoming increasingly unwilling to pay more than $200 for even the latest smartphones, but loyal Amazon customers may be so attracted to the brand that they are willing to pay up for the pricier version of its flagship phone.

As the U.S. handset market share held by retail chains like Radio Shack and Best Buy dwindles, Amazon’s role in smartphone sales continues to grow. And this could turn into a substantial headache for HTC, which now really depends on high-end sales in North America.

Asia used to be the core market of HTC, but a flood of cheap smartphones by brands like Xiaomi, Micromax and Karbonn have eroded HTC’s position badly over the past two years. Looking at India’s most popular retail website, Flipkart, it’s interesting to see that brands like Motorola and Samsung have recently made successful forays into the budget category by launching models priced under 7,000 rupees. But HTC has been unable to go that route: It has zero traction in the low-end of the market, leaving it highly exposed to the U.S. market.

And that is why a successful Amazon push into the high-end smartphone market in America could be a nasty blow to HTC.

HTC’s most popular models at Amazon used to be in the $200 to $300 on-contract price range. But today, the only on-contract phones HTC has in the Amazon top 20 sales chart are models that cost under $100 with a two-year plan. HTC has already slipped in the premium competition, squeezed out by Apple and Samsung. Even a medium-sized Amazon success in the high-end U.S. market could cause substantial damage to a vendor that is now struggling to break even on a global basis.

Much has been made of whether Amazon can cause any noticeable damage to Samsung or Apple in America. But the real impact of Amazon Fire may lie in its ability to fatally undermine the U.S. comeback attempts of minor brands like HTC, Nokia and LG.

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.


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