Amazon.com Inc. has finally launched its own smartphone, the Fire, that at its core is a hub for all things Amazon.
Fire is the latest addition to the e-commerce behemoth's deep arsenal of products and services and brings together many of those wide-ranging interests in one compact device. It's a way to tie consumers to the company by making the phone a one-stop shop for buying products on Amazon, listening to songs on Amazon Music, watching shows via Prime Instant Video, and purchasing and reading Kindle e-books.
"There's a logic to it," said Mike Levin, a partner at Consumer Intelligence Research Partners. "They used to be basically an online retailer. And now they've created a much more integrated set of products and services that meets people's needs for more than just buying goods."
In unveiling the phone, which had been rumored for years, Chief Executive Jeff Bezos said the Fire "puts everything you love about Amazon in the palm of your hand — instant access to Amazon's vast content ecosystem and exclusive features."
The smartphone costs $200 for a 32-gigabyte version and $300 for a 64GB version, both with a two-year contract — higher than expected given Amazon's history of pricing its hardware relatively cheap. AT&T will be the only carrier for the phone, which will be released July 25.
Speaking to a crowd of media representatives and consumers at a launch event in Seattle on Wednesday, Bezos said the company put a "huge effort" into perfecting the phone's design. Available in black, it closely resembles the look of the iPhone 5s. It boasts a 4.7-inch HD display, 13-megapixel rear-facing camera and five front-facing cameras.
Amazon faces a major battle to capture the attention of consumers, who have overwhelmingly settled on Apple or Samsung phones and have spent years downloading apps and personalizing their devices.
"It's a really tough space," said Julie Ask, an analyst at Forrester Research. "But the prize is also really big. There's no doubt mobile phones are becoming the primary engagement point for consumers."
The odds of a third player breaking through, as Microsoft has learned with its Windows Phones, are long even for companies with deep pockets. The once-ubiquitous BlackBerry all but disappeared during the last few years.
According to ComScore, 167.9 million people in the U.S. owned smartphones during the three months that ended in April. Apple was the No. 1 smartphone maker, with 41.4% of the market. Samsung followed with 27.7%. LG, Motorola and HTC rounded out the top five, each with market share in the single digits.
Colin Gillis, a technology analyst at BGC Financial, said the Fire doesn't really offer anything radically new in terms of pricing or contracts that would entice customers who have owned iPhones or Galaxies for years to toss them aside. He said Amazon would be lucky to sell 5 million this year, compared with the 37 million iPhones Apple sold in its most recent quarter.
Still, some analysts argued that the number of phones sold may be the wrong way to evaluate Amazon's efforts.
"I wouldn't define their success by volume," Ask said. "There's a lot to be gained for Amazon by what they're going to learn from this, and what they've already learned. And the phone stays close to their core business, which is media and retail. They're playing to their strengths."
Indeed, the Fire smartphone contains several media and shopping features that Amazon hopes will differentiate it from the rest of the pack.
For one, it makes shopping for products on Amazon easier. Bezos showed off a built-in feature called Firefly, which can recognize images, products, text and audio and connect smartphone users with a quick way to buy those items.
For example, a user can use the Fire to take a photo of a retail product — such as a book, DVD or CD — and the device will then find the item in Amazon's database and provide details and purchasing options. Taking a photo of a book will pull up a screen that enables the user to buy it as a Kindle e-book, as an audiobook, or as a hard copy via Amazon.com
Firefly, Amazon said, can recognize more than a hundred million items. It also works with voice activation, and can recognize music, artwork, Web and email addresses, phone numbers, QR codes and barcodes, Amazon said. There is a dedicated Firefly button on the side of the phone.
Bezos highlighted the phone's capabilities with video and music streaming.
"Can we build a better phone for our most engaged customers?" Bezos asked the crowd. "Can we build a better phone for Amazon Prime members?"
Another big feature of the Fire Phone is Amazon's Dynamic Perspective, which changes the view of an image with a new sensor system that responds to the way users hold, view and move the phone.
Dynamic Perspective recognizes where a user's head is relative to the device, which Bezos said would create a more immersive experience, one-handed navigation and gestures "that actually work." It also responds to tilting motions, which can make the screen scroll faster.
The phone has Amazon's Mayday feature built in, so any time a user needs help using the phone, he or she can press the Mayday button and be connected to a customer support rep in 15 seconds or less, 24/7, Bezos said.
Fire Phone users will receive free unlimited photo storage on Amazon's cloud drive. They'll also have the ability to take a photo even when the screen is off.
Amazon said it would offer 12 months of Amazon Prime free with the purchase of a Fire Phone for a limited time. Prime, which typically costs $99 a year, includes Amazon's video streaming service, its recently launched music streaming service and free two-day shipping.
Bezos displayed a chart that showed Prime memberships had exploded over the last year, a crucial indicator for the company because those customers tend to spend more money on Amazon.
As much as the phone, that may be why investors drove Amazon's stock up $8.76, or 2.7%, to $334.38 on Wednesday
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