Amazon Fire smartphone includes retail bombshell

Amazon unveiled its first smartphone Wednesday. The Amazon Fire has many of the bells and whistles of other smartphones, with some new twists and with one extra, Amazon-only component: Firefly.

Firefly is a program that allows users to point their Amazon phone at any consumer object in the real world and then shop for it on Amazon.

Demonstrating the tool on stage, Amazon CEO Jeff Bezos used an Amazon Fire to photograph a DVD and a book, then showed how they were for sale on Amazon.

Firefly stores the photos. When a user taps on them, it takes them to the Amazon sales page. Reporting from Seattle, Gigaom explains what happened next. “tap on the book: You can buy the Kindle edition, the paperback or the audiobook right there.”

That sounds simple. But what if the place where the consumer is standing is a brick-and-mortar bookstore? And they walk out not with the hard copy they photographed, but a receipt for their online purchase?

This can already happen, of course. But Amazon has built it into its new smartphone, insitutionalizing and encouraging customers to use brick-and-mortar retailers as Amazon showrooms.

This was controversial back in 2011, when during the holiday shopping season Amazon offered customers a discount if they used an Amazon app to photograph items for sale in bookstores and instead bought them online.

There was an outcry, in print and, well, online. Pulitzer Prize-winning novelist Richard Russo wrote an op-ed criticizing the practice that included the thoughts of many fellow writers, like Dennis Lahane, who called it “scorched-earth capitalism.”

Critics contend that Amazon is taking advantage of brick-and-mortar retailers, who have many real-world expenses the online retailer does not: rent, utilities, and salaries of local residents. Shoppers at local retailers pay sales tax, which goes into city coffers to pay for things like road maintenance, police, and schools. After successfully fighting off many attempts to get it to collect sales taxes, Amazon has begun to in a few states (16, as of December).

“Amazon’s Fire Phone is a showcase for the company’s various services, but it’s also being positioned as the best possible way to buy products and digital media from Amazon,” Chris Welch wrote at the Verge on Wednesday.

Of course, Firefly will work not just in bookstores but in any retail establishment, from a Prada boutique to Wal-Mart. It can identify up to 100 million items.

Like passing notes in class; I’m @paperhaus on Twitter