So don’t expect the company’s recently launched smartphone to do anything for AMZN stock any time soon.
The iPhone, of course, is the iPhone, with tens of millions of customers just waiting to upgrade to the latest handset. At the same time, Android-based smartphones are the market leader because so many different companies make so many handsets, hitting every price point.
AMZN can’t cede the mobile media or mobile shopping business to competitors like Apple and Google (GOOG), so it was only a matter of time before it entered the competition with its own smartphone. AMZN launched the Amazon Fire two months ago, but it’s hardly burning up the market.
The whole point of the Amazon Fire is to get its users to consume media and buy goods from AMZN. That’s its primary purpose. Unfortunately for AMZN — and anyone holding AMZN stock — that makes it a pretty lame smartphone in a market saturated with competition. Other shortcomings only compound Amazon’s problems with the Amazon Fire.
Trapped in the AMZN Retail World
The Amazon Fire hasn’t been out long enough to get an accurate reading on market share — and Amazon’s not going to release specific sales figures — but it has been a flop with critics. That doesn’t bode well for the success of the phone — at least not the way it’s currently configured.
Despite not being a consumer electronics company, AMZN pretty much single-handedly made and dominated the e-reader market. But that was an open field. More troubling is that the Amazon Kindle Fire is losing share to tablets running Android.
Hey, at least Kindle Fire had a good run. Judging by at least one recent independent review, the Amazon Fire is won’t have any share worth losing. Highly regarded Consumer Reports just weighed in on the Amazon Fire, and their verdict was not good. Perhaps the least attractive feature of the handset is the way it “traps” users into using AMZN — and only AMZN — services and products.
As Consumer Reports editor Mike Gikas told CNBC Friday:
“What happens with the Fire is that it’s locked out of Google’s Play app store, which prevents people from downloading very popular Google apps [like Gmail, Google Maps and Google Now]. These apps work together in a very interesting and compelling way that a lot of people like.”
The Amazon Fire didn’t measure up to the competition in other ways, such as its relatively poor battery life. Although it’s not an awful phone by any means, Consumer Reports says, it didn’t earn competitive scores in comprehensive testing.
With iPhone 6 on the near horizon, AMZN really needs to up its game. There’s no point in an AMZN smartphone if it doesn’t bring users into AMZN retail world, but trapping them there sure isn’t a selling point. That sounds like a way to alienate customers, not lure them in.
AMZN stock isn’t going to tank if the Amazon Fire phone is a flop, but it sure needs this strategy to work over the long haul to keep AMZN stock growing.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.