Amazon is jumping into the crowded smartphone market with a 3D model it hopes will easily connect customers to its online marketplace, in another attempt to use devices to drive sales in its key e-commerce business.
REPORTER: Fire is spreading. Amazon’s line of devices is expanding into phones with the long anticipated launch of the Fire smartphone. The communication and media device adds to the Kindle Fire HD tablet and the Fire TV set-top box recently announced. Amazon is building up a war chest to compete with other tech giants, says Citizen.VC’s Max Wolff.
MAX WOLFF, CHIEF ECONOMIST/STRATEGIST, CITIZEN.VC: “It’s not about making a big splash for profit, not even making a big revenue splash in the next quarter or two – even in the best case scenario. It’s about Apple encircling and building out their ecosystem, about Google encircling and building out an ecosystem, about Microsoft, and about Amazon saying: we are one of the big players in tech, we also have a totally encircled ecosystem where you can order online from us, you can use our apps on other devices, you can use our TV at home, you can use our tablet and you can use your Amazon phone.”
REPORTER: There are a few surprises. The Fire comes with unlimited cloud storage. But Amazon is not joining the trend of larger screens started by the Samsung Galaxy and expected to be soon followed by Apple’s iPhone 6. There’s a one-handed gesture feature, which presumably makes it easier for customers to access Amazon’s vast e-commerce marketplace and growing media offerings. And there’s Firefly – software that recognizes an object and then takes you right to the Amazon store where you can buy it.
MAX WOLFF, CHIEF ECONOMIST/STRATEGIST, CITIZEN.VC: “Let’s remember, if the mobile phone is the basic future of e-commerce, which we all think it is, then Amazon – the dominant player in American e-commerce, now facing Alibaba, now facing JD, now facing growing app native competitors – needs to be there. They need to control that situation too. And being one of a whole bunch of apps, with no particular advantage and some disadvantage, in this world is probably a bad idea. And let’s not forget running in the background – Google is moving into shopping.”
REPORTER: To make the phone even more attractive – buyers will get a free 12-month membership to Amazon Prime, which includes free two-day shipping. The phone which is only available on AT&T comes with a hefty $750 unsubsidized price tag, $199 with a two-year contract.