SEATTLE, 19 June-2014, NYTimes: Amazon on Wednesday introduced its own smartphone — a device optimized to allow customers to consume great amounts of video, books and music, preferably from Amazon.
Jeff Bezos, Amazon’s chief executive, announced the new phone, Fire, here in Seattle, the company’s headquarters.
Amazon executives asked themselves, Mr. Bezos said, only one question: “Can we build a better phone for our most engaged customers?”
The answer will not be a surprise: “I’m excited to tell you the answer is yes.”
The introduction of the Fire phone comes as the leading tech companies are increasingly trying to develop an array of services and products to keep consumers on their own platform. Microsoft brought out a tablet; Facebook tried a phone; Google is experimenting with a shopping and delivery service.
Against such a frenzy of competition, an Amazon phone was inevitable. It has been rumored for at least three years.
Jeff Bezos, chief executive of Amazon, which may unveil its first smartphone this week.With an Amazon Smartphone, the Retailer Seeks a Tether to Consumers.
“This is the next big battleground in the ecosystem war,” said Ben Schachter, an analyst with Macquarie. “Amazon is not going to turn the tide decisively in its favor with this, but just needs to establish a beachhead.”
The announcement took place in a warehouselike event space filled with 300 members of the news media, app developers and handpicked Amazon fans. The presentation began with videos from people begging to attend; 60,000 people applied to do so, but only 300 were admitted.
Mr. Bezos began his presentation by citing laudatory reviews of the company’s other hardware. “The most important thing we’ve done over 20 years is earn trust with customers,” he said.
Among the phone’s features is one called Firefly, which photographs bar codes on products and assembles them into a shopping list. Beyond those basics, Firefly can also recognize music that is playing, art on the wall of a museum or a TV show — Mr. Bezos demonstrated with “Game of Thrones” — even down to the scene that is playing. “Firefly recognizes 100 million items,” Mr. Bezos said.
Amazon’s leap into the smartphone business comes as sales of the devices are beginning to mature, at least in the United States and Europe. Their use for shopping, however, is just beginning to explode. In the United State, purchases made with phones will jump more than 25 percent this year to over $18 billion, according to eMarketer. At the moment, most mobile shopping is done with tablets.
The lengthy phone development process for Amazon was partly because of the difficulty of the task. Phones are a graveyard of tech dreams. Just ask Google, which was hailed as a genius for buying the handset maker Motorola, and then hailed again for cutting its losses and promptly selling the faded icon. Only Apple and Samsung have found it consistently profitable to make phones.
But Amazon, as always, is operating with a different playbook. Its phones will follow the model of the company’s tablets, which means they will be consumption devices.
When Amazon introduced the Kindle Fire in 2011, there was a lot of chatter about its being a challenge to Apple’s iPad. It was not. In the first quarter of this year, Apple had about a third of the tablet market, according to the research firm IDC. Amazon had less than 2 percent.
Still, that’s a million more consumers taking up residence in the Amazon ecosystem, where they are watching movies, ordering books, listening to music and maybe getting some dog food, diapers, lawn chairs or chocolate while they are at it.
Success in smartphones, just as in Kindles, will not be measured in the sheer number sold.
“Amazon will likely begin with the phones by targeting existing Prime subscribers, which have been estimated in the 20 million range,” said Eugene Signorini, vice president of mobile insights at Mobiquity. “If they are able to capture 10 percent of those subscribers in the near term, then that would likely constitute a success.”
That would force Google and Apple, and possibly Facebook and Microsoft as well, to introduce new innovations and features in their own products. That would benefit consumers in the short term, Mr. Schachter said.
And in the long term, if Amazon or one of the other companies becomes dominant?
“That might be more problematic,” Mr. Schachter said.