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Amazon's Fire Phone is all about selling stuff on Amazon.com

June 19, 2014

Yesterday, Amazon.com introduced its Fire Phone, the first smartphone from the e-tailing giant. Whether the new unit is about "new breakthrough technologies" (per Jeff Bezos) or is pretty much an average premium smartphone with a price to go with it (per multiple reports), there is one thing that is clear. The device is all about connecting users with Amazon.com and, if successful, that means sales well beyond just the purchase price.

"Fire Phone puts everything you love about Amazon in the palm of your hand — instant access to Amazon's vast content ecosystem and exclusive features like the Mayday button, ASAP, Second Screen, X-Ray, free unlimited photo storage, and more," said Jeff Bezos, Amazon's CEO, in a statement.

The Fire Phone will go on sale on July 25 and will cost $199 for the 32-gigabyte version if taking on a two-year contract with AT&T, the exclusive wireless network provider for the device. Without a contract, the Fire Phone sells for $650. Amazon is throwing in a free year of its Prime shipping and content service with each purchase of the device. Current Prime members will have a year added to their subscription.

Reviewers, even those who were mostly favorable on the device, do not see it as a serious threat to the market share held by either Apple's iPhone or Samsung's Galaxy line. The Fire Phone's un-Amazon-like price along with the AT&T exclusive are both seen as obstacles to purchase.

Posts from Amazon's Facebook page were particularly negative on the AT&T deal:

  • "Was looking so forward to this until you broke my heart and went exclusive with AT&T."
  • "D.O.A with AT&T exclusivity deal."
  • "Too bad. I'd be ordering one right now if it was available on Verizon."
  • "I am an existing Prime member and own a Kindle HD Fire. Will not sign a contract with AT&T ever. Want to keep my own provider, thank you very much."

A poll on the Engadget site found that 17 percent planned to "absolutely" purchase the Fire Phone with 52 percent responding "no way" and 32 percent saying "maybe."

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Discussion Questions:

What do you think Amazon.com is looking to achieve with the launch of the Fire Phone? Will it be successful in achieving its goals?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How likely is Amazon.com to achieve success with its Fire Phone?

Comments:

This was a me-too product, let's be honest. Sure it has some bells and whistles but its main goal will be to provide a wealth of information back to Amazon about their users.

I'm hearing the tide turning about Amazon and their overreach into every aspect of users' lives—something Apple and Samsung are not doing.

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Bob Phibbs, President/CEO, The Retail Doctor

Amazon is going full-tilt to grow their business, and this phone only adds to the temptation to shop for goods 24/7. This will grow their core business, and if the phones are decent quality, it will be a big winner for them.

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Tony Orlando, Owner, Tony O's Supermarket & Catering

Asking what Amazon hopes to achieve through this phone is the ultimate of rhetorical questions. Having read many of the reviews it appears this is nothing more than an Amazon shopping tool. Why people would jump to it (if they do) is beyond me.

Here's what I'm waiting for: Ego-driven leaders with visions of world domination sooner or later go one step too far and end up losing it all. We certainly see that repeatedly in politics, and increasingly in retail. The one inescapable thing in the universe is the life-cycle; we create, we grow, we mature, we die. True for Amazon, true for us all. Wait for it.

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Ian Percy, President, The Ian Percy Corporation

Great marketing comes in different forms—a phone works. Amazon is great at marketing and the Fire Phone is a nice add-on tool for their marketing program. But it is just that ... But why? Ain't it a phone, too?

AT&T is not the top carrier for people who want a phone for real phone usage.

  1. All the 3D and head tracking and bells and whistles are attention getters, and after a bit of time they will be features that are turned off. They are like advertisement extensions you hear on the radio. Main advertisement (phone) hits the TV and extensions (the fancy features) are heard on radio and seen on other mediums.
  2. The Fire Phone will be covered with links to your Amazon Prime account, always ready to sell you something from Amazon.
  3. With your Fire and Prime set up, what a great way for Amazon to track their target shopper—good marketing.
  4. Enjoy your Fire Phone/marketing tool/neat toy, I will stick with my regular cell phone.

P.S. Watch for drones with this phone, they may be tracking you! (more great marketing by Bezos).

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Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

Obviously with the Fire Phone Amazon is focused on merchandising its inventory to a ready market far and above looking for a new profit center in mobile devices, a model essentially like the Kindle and e-books. In some ways (I'm risking my reputation here) I think that this is somewhat of a miss for them. There are Amazon fanboys that will gobble this up and other heavy Internet shoppers that will like it, but as you look farther out upon the mobile user spectrum, I believe that the interest amongst potential users gets weaker and weaker.

The Fire Phone unlikely offers enough cache that loyal iPhone and Android users will be tempted to switch just to become a power shopper. It's not all that hard to use any phone and shop on Amazon and before too long, I would not be surprised to see Google up it's game on markerless object recognition to counter Firefly. 3D is of course appealing for gaming, but it's going to take huge buy-in from game producers to leverage that feature enough to pull in gamers. So, in its first incarnation, I'll be surprised if it makes a dent in Apple and Samsung sales—really surprised.

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Ken Lonyai, Digital Innovation Strategist, co-founder, ScreenPlay InterActive

First of all, it's not about the phone. It's all about Prime, which is quickly emerging as Amazon's core product.

Next, phone partisans are worse than political junkies or sports fans. They choose a side, dig in and refuse to be objective. The Fire Phone's 3D features may be gimmicks, but they are new gimmicks.

Ditto the idea that a phone is really not for making calls but a device to bring solace to the souls of people with little or no impulse control. At best—and worst—this is clearly an Amazon sales tool, so I assume Amazon is looking for increased sales.

If that's the goal, the answer to the second question is yes. At Amazon, every cracked door into the consumer's pocket is a good thing.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

Amazon launched the Fire Phone to get people to buy more stuff on Amazon. The phone in its current iteration, with AT&T as the sole carrier, and with standard, premium pricing, will have limited success in accomplishing that goal.

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Max Goldberg, President, Max Goldberg & Associates

The brewing battleground of the end-to-end ecosystem of hardware, services and content has been rapidly coming to a boil, with Google and Apple getting the most focus. But Amazon has been right there in the mix for some time, albeit with much less media attention.

The biggest focus of Google and Apple has been capturing the users' loyalty to their choice of hardware as the thing that binds them to the coveted services, app stores and media.

Amazon is certainly playing the same game for apps and media subscriptions, the Fire Phone clearly demonstrates their high priority on bridging the physical and digital worlds to capture a strong hold on the shopping and transactions battleground. This is an area of relative weakness for Apple and Google.

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Matt Schmitt, President, Chief Strategy & Innovation Officer, Reflect

Simply put, the Fire Phone adds a significant interaction point for an Amazon customer with the company. They aren't trying to knock iPhone or Galaxy off the top smartphone lists. It's about making an Amazon customer think Amazon first, and spend more time, and therefore money, on Amazon whenever and wherever they want to shop. Adds to Amazon's integrated stickiness factor.

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Mohamed Amer, Vice President, Global Consumer Industries, SAP

While you can make a call with the Fire Phone, its true function is to provide a dedicated mobile link to Amazon. Not sure it would have been a great success anyway, but limiting it to one carrier certainly has decreased that likelihood.

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Steve Montgomery, President, b2b Solutions, LLC

Amazon's new device is a direct electronic tether from the consumer to Amazon, slickly disguised as a phone.

I suspect Amazon's most loyal, frequent buyer, hardcore Prime customer will find the phone a must-have, in order to further encourage and support their shopping habits. For the majority of consumers, the notion of being continually connected to Amazon will feel a bit icky.

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Jeff Hall, President, Second To None

I don't expect the Fire Phone to be a huge success, but I found a lot of interesting things in the announcement.

On the good side:

Amazon is swinging for the fences. The announcement was rich in innovation. Unlimited free image storage. Free Prime. Dynamic perspective. Firefly. Mayday. Camera with optical image stabilization, etc. Frankly, it's been several years since an Apple product launch had close to that level of innovation.

Firefly was the most important thing announced. It was clearly the most evolved new feature on the phone, and it's an experience Amazon has been working on for a long time. It started as their dedicated flow app, moved to core functionality in the Amazon app, and is now a dedicated hardware button on their phone. Firefly and Dash are SIGNIFICIANT efforts to reduce the friction between want and fulfillment. I'm sure we're going to keep seeing it get better, and show up in more places. At the moment the conversion rate on mobile devices is tiny compared to laptops or tablets. People simply don't complete purchases on their smartphones. Amazon is on the forefront of changing that.

Why it probably won't be a successful phone:

AT&T. You can't win by launching a product on one carrier any more. Apple could get away with it in the early days when people had a smartphone or data plan and were likely picking their carrier based on the phone. Now the overwhelming majority of people who consider the Fire Phone will be switching from another smartphone, and they aren't likely to be willing (or able) to switch carriers to get it.

Fire OS. It's forked and based on an older version of Android, and at the moment it does not support things like Bluetooth low energy. The Android OS is fragmented enough, but not having a Google Play store is a big deal to savvy Android smartphone shoppers. Overall, there are too many rough edges in this OS to make it a must-have phone.

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Jason Goldberg, VP Commerce Strategy, Razorfish

As far as I can tell, it's just another phone. Had they come out with some enhanced feature connected back to an Amazon product(s) then maybe I could see this as a big boon. Just being a direct link to Amazon for shopping and streaming, well I can actually do that from any phone. Can't I? My 2 cents won't be adding to the price on this one. Sorry Amazon....

Lee Kent, Let's meet share and succeed in Retail, YourRetailAuthority

Bezos underestimates the intelligence of his Prime subscribers.

Prime appeals to those willing to try something different: unplug the cable box, let's say, and stream everything; stop hitting CVS on the way home from work and instead plan your purchases.

But a $199 contract-based phone? With AT&T as the carrier? Like the ones they sell in the AT&T store next to the CVS? (And are we not supposed to notice, Jeff, your bluetoothed hand permanently synced to our wallets?)

Offensive.

'FrankPoole'

What they are trying to achieve is obvious, more sales. However, the device will be a failure in the long run. Most people today want a technology device which gives them choices. The Fire does not do that. Instead it is a controlling device for both sales and communications.

Sounds like a device designed by the government, and we all know that won't fly.

Gene Michaud, Principal, tGrowth Solutions

If you read the reviews and articles, it doesn't look like the Fire Phone will be a disrupter. However, is that what Amazon is trying to achieve? Sure, who wouldn't want more customers. But, maybe this is a device for customers who already love Amazon, and it's another way, maybe even a better way, to interact with their favorite company. That could mean more business from existing customers. And, I'm sure they will still pick up a few more customers along the way.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

The discussion today has been overwhelmingly negative, so I'll be the contrarian.

Amazon releases minimally viable products and perfects them over time. Look at AmazonFresh or AmazonLocal. Unfortunately, you can't do that with hardware. You need to make a splash to have any success through the retail channel, and that means showing your warts with a v1 product in a mature market.

This would be a bad strategy if the business goal was to dethrone iOS. But it's a fine strategy if the business goal is to test and learn. Other elements that work just fine in a test and learn strategy:

  • Launching with a single carrier
  • Incompatibility with Fitbit
  • Charging market price rather than discounts
  • Building off a recent version of Android

Ultimately Amazon wins on price and experience rather than splashy launches. It has a chance in the long game with Firefly for commerce, gesture navigation for one-hand use, and Dynamic Perspective for gaming.

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Dan Frechtling, Vice President, Global Product Management, hibu, PLC

Since I purchased my Kindle a few years ago, I visit Amazon much more often and I estimate that I have purchased 3x more books from their site. I'm a bit on the high-purchase side as TechBuffalo data cites about a 75% increase in sales to owners of Kindles vs. non-Kindle owner customers. As I am sure Amazon has the exact numbers, they probably understand the value of putting their store into the hands of their most valuable customers. I don't expect Amazon to dominate the mobile phone market, but this is another way for them to increase their profitability and better engage their most loyal customers.

Makes me wonder why other retailers have not leveraged branded mobile devices to fit their customer bases' needs to better enable mobile engagement.

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Larry Negrich, Vice President, Marketing, nGage Labs

The Amazon Fire phone seems like a collection of very good ideas with some major drawbacks and no clear audience.

Most of the really terrific ideas, like ASAP and X-Ray, would probably find a broader audience as apps for Android and iOS instead of proprietary tech tied to a single device.

Many of the features, while impressive, don't stand apart from the other leading products from Apple or Samsung. And if I'm forking over cash for the high price point (for the contract-free version) I can't imagine why I wouldn't buy a Galaxy S5 or iPhone—or maybe wait a tad longer for the heralded iPhone 6.

In many ways, the Fire phone seems like an all-in-one answer to omnichannel retail expectations from consumers: integration of real- and digital-world experiences, produce identification and information anytime or anywhere, instant purchase of anything you see regardless of medium—but I believe this is a very retailer-centric way to get there.

I'm intrigued by the Fire phone, wouldn't mind having one to doodle around on (without a contract or high sticker price), and I think it's an interesting 1.0 effort. At the end of the day, it's more about what Amazon wants than it is about filling a consumer demand.

I'll be keeping an eye out for cheap open-box returns in 60-90 days....

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Lance Thornswood, VP/Managing Director, inRetail

Well this is not about selling mobile, this is about mobile selling. And I for one find this innovative.

Apple and Samsung need not fear and no one is talking about taking them on. But there are features about Fire which are useful—cloud storage to begin with. Really useful. Mobile phone cameras brought about death of traditional cameras. And this is a storage feature I'll bet people are going to like. There are others to like too.

Let's wait for numbers to come in for next 2 quarters before writing this "gimmick" off....

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AmolRatna Srivastav, Asst. General Manager, Analytics and Insights, Tata Consultancy Services

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