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Jeff Bezos: Amazon Fire Phone Flop Was ‘Bold Bet’ That Will Take Many Iterations to Get Right

Amazon.com chairman and CEO Jeff Bezos said the failure of the e-commerce giant’s first smartphone — the Fire Phone — comes with the territory for a company that regularly makes big bets on new businesses.

“One of my jobs as the leader of Amazon is to be bold,” said Bezos, speaking Tuesday at the BI Iginition conference in New York. “If you’re going to take bold bets… you don’t know if they’re going to work. Experiments are prone to failure.”

Asked when Amazon would have a competitive Fire Phone in the market, Bezos said, “It’s going to take many iterations. Who knows? Ask me in a couple of years.” (Bezos — who rarely grants interviews — is an investor in Business Insider, the conference’s producer.)

Amazon took $170 million charge related to the Fire Phone for the third quarter, after it flopped among consumers. The device — hyped with features such as a 3D-like visual display, gesture controls and a content-identification system dubbed Firefly — had been aimed at competing with Apple’s iPhone as well as Android smartphones from Samsung and others. But consumers weren’t taken with the gee-whizzy bells and whistles and also likely balked at AT&T being the sole carrier for the phone.

Bezos pointed to other devices in Amazon’s hardware portfolio as having success, including the Kindle e-readers and tablets, now on their seventh generation. Regarding Amazon’s Fire TV set-top and recently launched Fire TV Stick adapter, “we’re having trouble building enough,” he said, and claimed the same for the Amazon Echo smart home-speaker system.

Other big bets the company has made that have proven to be significant businesses include Amazon Web Services and Amazon Prime, and those “pay for a lot of experiments,” Bezos said. He added, “I’ve made billions of dollars of failures at Amazon. Literally,” citing past investments in Pets.com and Kozmo.

In Q3, Amazon posted an operating loss of $544 million in the third quarter of 2014 — the biggest in Amazon’s history. BI co-founder Henry Blodget, who interviewed Bezos on stage, asked if Amazon could ever make money. Bezos answered affirmatively, but said the company’s strategy is to use profitable lines of business to grow into new areas. “Companies that don’t continue to experiment… the only thing they can do is make a hail-mary bet at the end of their corporate existence,” Bezos said.

Bezos also said at the conference that Amazon has a leadership-succession plan for himself and other senior execs, but he declined to say who is next in line to be CEO.

Last month, Amazon and Hachette Book Group settled a very public six-month dispute over terms for ebook and print sales. Bezos said that “retailers negotiating and fighting with suppliers is not a new phenomenon” and claimed book publishers are enjoying “unparalleled profitability” because of e-books. He also said that making reading books more affordable through devices like the Kindle will expand opportunities for authors, rather than ending up making them less money.

“It’s very difficult for incumbents who have a sweet thing to accept change,” Bezos said.

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