Amazon Fire Is About Web Shopping, Not Smartphone Market Share

NEWS ANALYSIS: The consumers most likely to buy Amazon’s Fire smartphone represent a limited group of major fans of the online retail brand, say analysts. 

Amazon Fire Phone

Amazon delivered on most of the rumors when it introduced at a June 18 press event in Seattle its Fire smartphone with an industry-first, 3D-like display.

Amazon calls the technology Dynamic Perspective and claims that changes the way users see and interact with the world and enables an experience not possible on other smartphones.

Fire also features Firefly, a technology that "combines Amazon's deep catalog of physical and digital content with multiple image-, text- and audio-recognition technologies to quickly identify Web and email addresses, phone numbers, QR and bar codes, plus over 100 million items," Amazon said in a statement.

Firefly will make it simpler for users to save a number as a contact or visit a Website without typing out a URL, as well as to purchase any of the 245,000 movies and TV episodes, 35 million songs and 70 million products that Amazon sells.

Fire also features the Mayday service that Amazon introduced with the Kindle Fire HDX that promises 24/7/365 customer service from a human that's activated within 15 seconds of pushing the Mayday button.

There is also Second Screen, which lets users "fling" video content from the Fire to a Fire TV; free unlimited cloud storage for photos; a 13-megapixel rear-camera that's said to outperform cameras from Samsung and Apple; and, among a laundry list of other features, a 4.7-inch In-Plane Switching (IPS) LCD HD display that the company says is "optimized for one-handed use."

Is all that enough to compete in a smartphone market that Apple and Samsung dominate near entirely, to the frustration of all other comers?

"Amazon's strategy here isn't to take meaningful share in the smartphone market, or even to make lots of money selling smartphones," Jan Dawson, principal analyst with Jackdaw Research, said in a research note following the event. "It's to cement the relationship it has with its most loyal customers. The Fire Phone is intended to put Amazon's content front and center, and the Firefly feature is intended to make it easier than ever for customers to buy things through Amazon."

Avi Greengart, with Current Analysis, agreed. "Amazon is aiming the Fire Phone at the most rabid members of its customer base: people who have invested in Amazon content and find the idea of Firefly appealing," Greengart told eWEEK.

He added that the phone's other standout feature isn't its 3D display but Mayday.

"No other vendor offers this level of support, and there are many iPhone and Android users who could really use it," he continued. Plus, "Fire Phone buyers will almost certainly be pushing Mayday, at least at first, as the phone's gesture-based user interface can be confusing."

AT&T will be the exclusive provider of the Fire (at least initially), and is offering it starting at $199 with a two-year contract.

Carolina Milanesi, chief of research and head of U.S. business at Kantar Worldpanel, Tweeted that given the price, she was "a little confused about what the opportunity is" other than if a person wants Prime. The Prime service normally costs $99, which is included for the first year of the phone. That means that Fire can be thought of as a $100 device.

Trip Chowdhry, with Global Equities Research, was impressed. "Apple has probably fallen behind in innovation—they are still struggling with figuring out the right size screen, while Amazon is racing ahead with innovations, with Dynamic Perspective and Firefly being the most ground breaking," Chowdhry said June 18 research note.

What kind of sales might Amazon realistically expect?

"I think the real fanatics are a fraction of [the Amazon Prime] user base. Given that the Prime user base is 10 percent of the overall base, maybe 10 percent of the Prime users? So maybe a couple of million," Jackdaw's Dawson told eWEEK.

He added, "I don't think this will make Amazon a major player in smartphones at all, unless something changes dramatically."

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