Unit Volume Might Not Be Fire Phone's Legacy

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NEW YORK – Amazon won’t sell boatloads of its Amazon Fire Phone because of its premium pricing, an app store that offers far fewer apps than competing app stores, and exclusivity through one carrier, multiple analysts said.

But Amazon could measure success by introducing fans to another way to access Amazon apps and services, including online shopping, and competitors could take a cue from the phone launch by offering more exclusive services to differentiate their hardware, the analysts noted.

The Amazon-designed Android-based smartphone will be available July 25 through AT&T stores and Amazon at $199 with contract for the 32GB version and $299 for the 64GB version. For a limited time, users will also get a free year of Amazon Prime service. The phones also come with free unlimited Cloud storage of photos taken with Fire.

Key features include Dynamic Perspective, Firefly, and the Kindle tablet’s Mayday customersupport button to connect via audio and video with customer service.

Dynamic Perspective uses a custom processor, four specialized front cameras and four separate IR sensors to track head movement. As a user’s head changes position, so does the displayed perspective of specially enabled apps, including games and maps with 3D images, built with the company’s Dynamic Perspective SDK.

Dynamic Perspective also enables gesture-based controls, such as moving the phone around to view the Empire State Building from different angles when displayed on Amazon’s map app. Tilting the phone lets users scroll through books and move maps around, and users can flick their wrist to navigate through songs or other menu items.

Firefly, a Cloud-based service launched by a dedicated hard button, uses image- and text-recognition technologies to recognize more than 70 million items, including household products and media such as DVD. The items can then be bought from Amazon.com if available.

Firefly’s audio-recognition technology recognizes songs that are played back, and it recognizes movies and TV episodes based on their audio content. The music and movies can then be purchased.

“The price point will make the Fire Phone a difficult sell — both with AT&T’s subsidy and without,” said Ovum senior analyst Francesco Radicati. “Its price is comparable to that of an iPhone, but without the specs or app ecosystem. While it uses Android, it’s a forked version, similar to that on the Kindle Fire tablet, that doesn’t have access to Google’s Play store.”

Although the phone “is designed to be most useful to customers who already pay for Amazon Prime, I’m not sure its specs or the Fire- Fly function, which allows users to scan objects and buy them directly from Amazon, are enough to convince others to sign up for Amazon Prime and join that ecosystem,” he said.

An exclusive carrier deal with AT&T would incentive the carrier to promote the phone, but “AT&T exclusivity is by no means a guarantee of success,” he continued. Nokia signed an exclusive deal for the Nokia Lumia 920 a couple years back, “and the Windows Phone ecosystem remains in a distant third-place to Android and iOS,” he said.

Gartner analyst Nguyen Tuong called the launch “less a device launch than the launch of an ecosystem tied to the device.” The device itself “stands on its own two feet” by offering unique features and highperformance specs such as 4.7-inch HD screen, rubber frame for durability, 2.2GHz quad-core CPU, 2GB RAM, 590-nit display brightness for outdoor viewing, 16-megapixel main camera with f/2.0 lens, optical image stabilization, and dual front speakers for stereo playback and virtual-surround playback in landscape mode. More important to Amazon, however, is that the phone “brings all of the elements of their ecosystem to their device,” he said.

It pulls together all the pieces that they already do well,” Tuong said. Firefly identifies objects and “is tied directly to the Amazon store,” whereas other smartphones can ID products but don’t include a way to buy them, he explained.

“I’m skeptical of the device getting enormous volumes, but it will pave the way for other vendors to realize what is necessary beyond the hardware [to differentiate] with services that make sense,” Tuong said. The Fire Phone won’t deliver large enough unit volumes to hurt other vendors, bit its impact will be in the trends because “we’ll start seeing all vendors “make more significant” to add bundled services, he said.

For his part, Recon Analytics analyst Roger Entner said the device is aimed squarely at Apple and Samsung but won’t generate their volumes. “If it does as well as the Kindle tablet, they’ll be happy,” he said, pointing to Kindle share of 3 percent to 6 percent. “Regardless of how great a phone is, if it ain’t Apple or Samsung, consumers ignore it,” he said. “The best devices aren’t from Apple or Samsung. Sales of a device and how good it is aren’t correlated.”

Whether the Fire Phone will deliver as much share as the Kindle tablet, however, isn’t certain, given that the tablet is much more aggressively priced against its competitors than the Fire Phone is against its competitors, he noted.

If the motive behind the Fire Phone is to generate more sales of Amazon content and products sold online, then Amazon should have priced it lower as it did with the tablet, he said.


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