No question price was the single biggest mistake in the Fire Phone. It was one of the notable times Amazon betrayed how they usually go after product segments, with relatively low prices and relatively high quality. Going after a very high volume, low price phone at good quality, is exactly what they should have done. Amazon saw the money machine that Apple had and thought they could slice off part of it (just $4-$6b in income would have been huge for Amazon back then); at that time AWS was not yet spitting off a large amount of operating income, so they were still thrashing around for high margin homerun that would give them some operating breathing room (same reason they took shots at eBay in auctions and Google in search). Instead of treating the Fire Phone like the rest of their hardware efforts, they reached for margin.

I'm slightly surprised they haven't taken another shot at a high volume, low price Fire phone. For further device distribution purposes (to layer services on). Why bother to continue with tablets and not do anything in phones. I've been assuming it's because of the stink of that failure, they're biding their time.