Logo Logo

Nobody Asked

The only time to buy these is on a day with no 'y' in it. Warren Buffet

With millions of active Prime members and documented successes in the hardware product category (Kindle), entering the smartphone market would be a logical next step for Amazon. This was specially relevant for the company given the high fees of app stores (as high as 30% for iOS) that were degrading the thin profit margin of its mobile sales.

The Fire phone was presented to the public in June 2014. It was designed to be a product with killer tech features that targeted the top of the market. Its positioning was so clear that Bezos even compared a photo taken with the Fire Phone to the same one captured by an iPhone and a Samsung phone side by side during the product announcement event!

The “beautiful phone” had industry leading brightness (the screen was readable under any lighting conditions), amazing sound (from its dual stereo speakers and accompanying earbuds incapable of tangling), and was able to take really crisp photos (due to an optical image stabilisation achieved with tiny electrical motors that protected against shaky hands). In the case of any issues, customer support would be in the screen in 15 sec or less - the Mayday Service, - and when the urge to buy a product was uncontrollable, customers could scan any product with Firefly and be redirected to Amazon.com. On top there was still its headline feature - Dynamic Perspective - which allowed users to see in 3D without the need of glasses.

The pricing point started at $699 or $199 with a two-year contract with AT&T. However, in just a few months, Amazon cut the contract price to 99 cents!

Why? Amazon entered a saturated market with a product that lacked basic requirements, portrayed less-than-impressive (and costly) delight features, and obligated customers to switch to a newly created far-from-mature app ecosystem. Yes, Dynamic Perspective was “cool” in some games, but that was it. It also relied on expensive hardware (four camera lenses) and an eye tracking algorithm which drained the phone’s battery. And the price was just too high.

Three months later, Amazon’s CFO declared the product would be discontinued. The phone led to substantial losses, as expressed in the Quarterly report: “During the three months ended September 30, 2014, we recorded charges estimated at $170 million primarily related to Fire phone inventory valuation and supplier commitment costs. The remaining amount of Fire phone inventory (…) was $83 million as of September 30, 2014.”

How many people here have a Fire phone? Yeah, no, none of you do.”

Jeff Bezos, Nov 2019, address at the Smithsonian’s National Portrait Gallery, Washington D.C.

--

The Problem Solver Fallacy 🤔

Engineers and scientists love solving problems, especially when new and exciting technology is involved. However, the real issue arises when the problem they solve is not the right one. It is not uncommon to hear about startups or products that went through years of R&D development, only to fail upon release.

Why does this happen? Often, the love for technology blinds us to the truth of what a customer wants. Product managers are accountable for returning the focus to what matters: delivering value that customers are willing to pay for:

1. Get close to your customers

A phone with 1000 awesome features will not be a market hit if its battery only lasts a couple of hours. It's important to get the basics right! Understand what customers require, value, and what challenges they face

2. Question what you hear...

a) from your customers

Ford summarized this perfectly: "If I had asked people what they wanted, they would have said faster horses". That's why understanding your customers goes beyond listening. Observe people’s behavior and interaction with your product.

b) from your team and leadership

Several tech features that failed in Amazon were from Bezos himself. Technology enthusiasts can get excited with technology. To prevent that unuseful features get added, always ask why. If the answer does not begin with a customer benefit, be mindful of adding that feature.

3. Explicitly express the value to the customer

For each feature you add, write down explicitly the value it delivers to the customer. Be also aware that even though a feature delivers value, your customer might not be willing to pay for it.

4. Experiment with proxy low-cost features

When developing expensive features with uncertain value, it is helpful to identify simpler ones that give insight about customers. With that knowledge, it is easier to decide whether to invest in their full version. Landing pages are great examples of simple ways to assess customer interest at low cost.

 

​​​​

 

Me

Catarina Pinto @catarinappinto