Seven years after Apple's original iPhone went on sale, Amazon finally dipped its feet into the smartphone market.
Amazon unveiled the Fire Phone on Wednesday, a device that is rumored to have been in development since 2009. The smartphone is priced at $199 and up, comparable to the iPhone, but it attempts to stand out with a range of novel features: a sensor that responds to the way you hold the device, a Firefly button that can identify items in the world around you (and automatically put them in your Amazon shopping cart) and the company's Mayday button for customer service.
If you're wondering how exactly a smartphone fits into the ecommerce giant's strategy, just consider some of the demos from the event. Amazon showed off how the phone can be used to read books sold on Amazon, sync with Amazon TV, store photos in Amazon's cloud, scan objects around you and shop for them on Amazon. The device will also include a complimentary 12-month membership to Prime, Amazon's paid service for faster shipping and various streaming content offerings.
"Fire Phone puts everything you love about Amazon in the palm of your hand," Jeff Bezos, CEO of Amazon, said in a press release issued after the event. It functions as a kind of central hub for all the products and services Amazon offers, with the potential to be a personal shopping assistant in your home and on the go, enticing you to make more purchases.
"The last thing Amazon wants to do is be relegated to an app on the Google Play store or the App Store. They're going after the whole ecosystem.""The last thing Amazon wants to do is be relegated to an app on the Google Play store or the App Store. They're going after the whole ecosystem."
Based on the current price (most expect it to go down) and the specs announced, Gillis doesn't exactly expect the device to become the new smartphone market leader. "They're not gonna be dethroning Apple anytime soon," he says. Other analysts we spoke with tend to agree.
"There's nothing that is really a wow here," says Sucharita Mulpuru, a retail analyst with Forrester Research. However, if previous Amazon hardware launches are any indication, it could prove attractive to existing Amazon customers.
"Ultimately, the primary users do tend to be their own customers. That's who are the adopters of Kindle tablets," she says. "I’m sure that those people spend a lot more with Amazon."
That more or less sums up Amazon's hardware ambitions in a nutshell: encourage existing customers to shop more and rely more on Amazon, and perhaps bring in some new customers as well. But while making the shopping experience more frictionless may be central to Amazon's goals, it may not be such a big selling point to consumers.
As Mulpuru puts it, "Do you want your phone to be showing a bunch of product to you every time you have it with you? No."
Wall Street's reaction to the announcement was positive. The stock surged by as much as 3% in late trading Wednesday before ending the day up 2.7%. The consumer reaction remains to be seen.
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