Today Amazon (AMZN) took the wraps off of one of the worst-kept “secrets” in the tech world: the Fire Phone.
Speculation of an Amazon smartphone has been ramping up for months and it hit a fevered pitch after Amazon announced the Seattle unveil and plastered its website with video of people reacting to a mystery device. After building up to the announcement by noting Amazon’s Prime ecosystem, its world-class hardware expertise and “hundreds of millions of engaged customers,” CEO Jeff Bezos finally held up the Fire Phone.
It’s not the cheap device we were expecting.
Key features of the 3D smartphone are Firefly (automatic product identification), close ties to all of Amazon’s services, a surprisingly robust primary camera with optical image stabilization, and the 3D interface that uses multiple cameras and face-tracking to produce more realistic visuals.
The Amazon smartphone is an AT&T (T) exclusive –another coup for the wireless carrier that first scooped up the iPhone.
Fire Phone Key Specs
- 4.7-inch HD (1280 x 720) display with 590 nits of brightness for outdoor viewing
- Quad-core Qualcomm (QCOM) Snapdragon 800 CPU at 2.2GHz with 2GB RAM
- 6 cameras, including main rear camera at 13 MP (with optical image stabilization), front-facing camera for video chats and four front-facing cameras equipped with infrared sensors to support Dynamic Perspective 3D
- Firefly button for visual recognition of bar codes and physical objects as well as identification of digital media (music and video) — currently 100 million items in Firefly database
- 32 GB or 64 GB storage
- Dual stereo speakers with Dolby Digital Plus virtual surround sound
- LTE, 802.11ac Wi-Fi, Bluetooth and NFC
- Includes premium earbuds with flat (tangle-resistant) cables
- Includes Amazon’s Mayday live video support
- Runs Fire OS 3.5
Fire Phone: It’s About Prime
The Kindle e-reader, Kindle Fire tablets, Fire TV and the new Prime Music streaming service are all about keeping customers hooked on Amazon’s digital content and Amazon Prime. With more customers going mobile, an Amazon smartphone was almost a necessity to keep Prime membership growing.
While you can access Prime content using Amazon apps on other platforms, AMZN is firmly positioning the Fire Phone as “the best way to enjoy Amazon content.” It comes with a free year of Prime membership to seal the deal.
Fire Phone: Amazon Smartphone Has Advertising Potential
Business Insider’s Henry Blodget pointed out back in 2012 that Amazon was already pulling in more than $1 billion in ad revenue, largely by placing targeted ads at the bottom of product pages on its website.
The future of ads is mobile, and the new Amazon Fire Phone positions the company to challenge Google (GOOG) for a bigger chunk of that mobile search ad revenue.
Fire Phone: Should Apple and Samsung Be Worried?
The Amazon Fire Phone caught many off guard with its premium pricing; the expectation was that Amazon would price the Fire Phone much lower in the hope of scooping up mid-range smartphone buyers. However, at $649 without a contract, it’s priced the same as the iPhone 5s and Galaxy S5. Considering both flagship devices outgun it when it comes to specs and have a commanding head start, convincing users to switch to the Amazon smartphone could be a tall order.
If the Fire Phone is being sold at a profit (a move that would run contrary to AMZN’s usual breakeven approach to hardware), the company could actually pick up some decent revenue in phone sales if it manages to move units.
In the short term, I don’t think the iPhone or Galaxy are threatened, but we’ll have to see how this goes. AMZN finished up nearly 3% on the news, so clearly investors think the Fire Phone has a shot at pushing its way into the market.
Fire Phone: Gaming Potential?
The 3D effect employed by the Amazon smartphone does have gaming potential, but don’t expect it to be a game-changer. Nintendo’s (NTDOY) 3DS offered glasses-free 3D and while many developers took advantage of the capability, few released games that require 3D, recognizing the reality that many players simply turn it off. Nintendo then released the 2DS, a less expensive version of the hardware that skipped the 3D altogether.
Apps that take full advantage of the Fire Phone capabilities will have to be heavily customized too — something developers hesitate to do when it means releasing versions to Apple’s app store or Google Play will require serious re-jigging.
In short, some mobile games will be released to the Amazon app store that make use of the phone’s capabilities, but don’t expect this 3D smartphone to be a mobile gaming revolution.
Fire Phone: Enhanced Showrooming Should Make Brick & Mortar Retailers Nervous
Stores selling everything from books to TV sets have been walloped by Amazon’s online store and the practice of show rooming — customers checking out a new product in the store, then turning around and buying it from Amazon at a discount.
The new Amazon smartphone makes that situation worse because now everywhere is a showroom. If you like your friend’s TV, your neighbor’s mailbox or you need to replace your existing coffee maker, Firefly can get it to you almost effortlessly. Point the phone at an item you want, push the Firefly button and have it in your Amazon cart in seconds.
The Fire Phone is available for pre-order today on Amazon, starting at $199 on contract. The new Amazon smartphone is expected to ship by July 25.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.