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Amazon cuts Fire Phone price to $199 without contract

Eli Blumenthal
Special for USA TODAY

You can call this a "fire sale."

The app that links to shopping on Amazon.com is shown on the new Amazon Fire Phone.

Amazon late Tuesday night cut the price of its much-maligned first smartphone, the Fire Phone, to $199 for the 32GB version unlocked and without a two-year contract. The phone will continue to come with a free year of Amazon's Prime service, traditionally $99 a year, that offers access to a variety of the company's premium features including free two-day shipping and access to its Amazon Instant Video streaming service.

The bundle of the Prime service with the Fire Phone makes for an interesting offer for those who haven't signed up for Amazon's Prime service or are considering doing so in time for the holiday shopping season as the extra $100 gets you an unlocked smartphone (albeit, one that is far from perfect) that's not tethered to a new two-year contract in addition to all the benefits of Prime.

The price cut marks a rather steep drop for Amazon, which initially charged the same $199 price for the phone with a new two-year AT&T contract or $649 without one. In September, the online retail giant dropped the two-year contract price to $0.99 and the off-contract price to $449. The new price is also for the unlocked version of the phone, which means it should work internationally as well as on the AT&T and T-Mobile networks in the U.S., though it still lacks some of the necessary bands needed to gain complete access to T-Mobile's 4G LTE network (the phone does support T-Mobile's 4G HSPA+ network).

Amazon's first foray into phones has not been the success the company hoped for, with the device currently holding a meager 2.5 out of 5 star rating based on over 3,800 reviews posted on the company's site. In its latest earnings report, the company took an $170 million charge in relation to the phone, with CFO Tom Szkutak disclosing to investors that the company had $83 million worth of unsold Fire Phones.

For its part, Amazon says it's committed to trying again in the smartphone space. In an interview with London-based newspaper The Guardian, Jorrit Van der Meulen, vice president of devices for Amazon in Europe, compared the phone to Amazon's first Kindle e-Reader which faced similar initial negative reception and said that the company had "learned a lot" from its first Fire Phone and remains "undeterred."

Follow Eli Blumenthal on Twitter @eliblumenthal

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