Thursday, June 19, 2014

Amazon's Fire smart phone: is it a miscalculation?

I've been waiting with interest to see what the long-rumored 'Amazon smart phone' would look like, and how it would compete with established standards such as Apple's iPhone or Samsung's Galaxy offerings.  The new phone certainly seems to offer a similar technological experience, with some interesting quirks and features, but the price . . . that worries me.  Amazon could have chosen to be genuinely competitive on price, but instead elected to position its smart phone in line with the high end of the market.  Personally, I think that was a serious mistake.  It's just another 'gee-whiz' device in a market filled with them - or, at least, the promise of them (many don't live up to the hype).

Consider the alternatives that are currently available.  The smartphone market is now saturated.  Instead of spending hundreds of dollars for a device, or getting it cheaper when buying it with a contract for service (which is also expensive), consumers can elect to buy a much cheaper smart phone from prepaid service providers such as Virgin Mobile or Straight Talk.  Walmart even offers an Android smart phone for the latter service for under $30 - the clearest sign yet that the smart phone boom, where consumers could be conned into paying way too much for a device, is winding down.  They've now become just another consumer device.

Furthermore, by partnering with just one mobile phone service - AT&T - Amazon has shut out many of its customers who already have contracts with other suppliers.  I'm not an AT&T customer, and considering the absolutely appalling customer service I've experienced at the hands of that company in the past, the last thing that interests me is submitting myself once more to their torturers customer service department.  To learn that I can't have an Amazon Fire phone unless I do that is an instant deal-breaker as far as I'm concerned, irrespective of price.

Another factor is the current state of the economy.  I think Amazon could have wiped the floor with its competition if it had introduced a phone to match the low end of the market at a killer price, perhaps including certain freebies that the competition could not match (for example, its music streaming service or bundling a reduced-cost Prime membership with the phone).  No-one would expect it to give a year of free Prime membership with an economy phone, but it has enough marketing clout that it could probably have made a lower-end unit an attractive option in other ways.  If it had been 'unlocked', able to be used on any network, or sold in conjunction with existing service providers so that it could be piggybacked onto their networks, I think that could have been a huge seller.  However, it's chosen not to do so - and I think that's going to limit the company's market penetration.  It's just another player now.  (Amazon may have plans for a cheaper phone later, but that's not clear at this stage.)

I'm not alone in wondering about this aspect of the Amazon Fire phone.  Matt Warman points out:

The Fire Phone is all about driving consumers to buy more from Amazon ... it’s above all a gateway to Amazon itself. In a world where Google and Apple are endlessly trying to persuade customers to buy films and TV and apps from them, Amazon figures it will be easier for them to break in, because they are the place where many consumers already buy films and TV programmes that they either watch on other devices or get delivered through the post.  None of this is to say that Amazon is assured of any serious success, and its business model usually depends on selling cheap devices at wafer-thin margin on such a scale that the process is viable. This could yet be a project that meets a quick death.




Cedar said...

I currently have unlimited talk text and date for less than $50 a month, on a phone I own, so going to a contract phone interests me not at all, as I would be paying close to double for less service if it's anything like what I shopped a while back. Also, when I found out you are limited to the Amazon app store, you can't access all of google's play store and servies, that alone would be a deal breaker for me. Ah, well, they can't do everything right.

Old NFO said...

Good questions, NO good answers here... sigh...

emdfl said...

Just another .gov PTD(personal tracking device), heh.

Anonymous said...

IIRC this is the one with the built in hardware malware. Um, I'll wait. I have a really dumb phone that makes phone calls. When I remember to charge it and turn it on. I'll pass on the fire-fone.


Kentucky Packrat said...

I am an Apple geek because Apple creates a consistent universe that generally works right and works together. (Yes, I know that's not always true, but it's a LOT better than Linux or Android...)

I got Milady a $150 phone, and she downloaded a directions app that put the navigator in the background. And then proceeded to crash. So the background navigator is still giving directions, but then she restarts the app, and a second navigator also starts giving directions. At least they weren't arguing.... I ended up power cycling the phone.

But, that kind of behavior is OK out of a $150 phone. You expect quirks and "good enough".

I am NOT paying an Apple premium for a piece of crap ecosystem, no matter how much Amazon pastes over the Android gaps.

Anonymous said...

I think one thing you are missing is that the dollars aren't just in the phone, but also in the sofware and on They are selecting for the "mass affluent". Silicon valley mobile startups always target iOS first for this reason and only pick up *any* Android platform once they have proven some initial success. I'm sure there will be an Amazon phone at the lower end but for now they are going after people who will spend money on software, goods, and services over and above the phone.

The Raving Prophet said...

Amazon is trying to follow the Apple model- your ecosystem is not just there to sell the devices, but is also there to sell media. People complain about iTunes as a music/media organization program because they don't realize that's not really iTunes' purpose- its real reason for being is to make it easy to funnel your purchases through Apple.

Amazon now has three of the four legs- mobile phone, tablet, and set top box. They lack a standalone computer option, but honestly, for this kind of thing that's not really mandatory. Apple integrates iOS with OSX extremely well, but Amazon can just use their own programs to integrate reasonably well with Windows computers.

I don't know that Amazon will overtake Apple on this, but they WILL get a lot of interest from those who would rather leash themselves to Amazon and Google than to Apple.

The Old Man said...

Been a Prime customer for years. Spent mondo money @ Amazon. BUT have my cellie thru my daughter's plan for both the Bos and me self @ about $10/month under grandfather plans. Flip-phones without (known) GPS. I may be under the radar - but I doubt it.
I don't care. Molon labe....

Inconsiderate Bastard said...

It is surprising; Bezos rarely makes these kinds of errors. I suspect you're right, it's seeking to trade on the Amazon name/experience, and I'll wager a number of people buy it because Amazon. At that price point, why buy an imitation iPhone when you can get the real thing?

I'm a second hand AT&T customer, with a cheap Brand X phone through a Brand Y provider who happens to use the AT&T network. Given the absolutely stunning level of incompetence at AT&T (they are fairly good at wired voice, and completely suck at everything else, especially anything to do with customer service) I'm not at all interested in expanding my relationship with them.

Anonymous said...

I am perfectly happy spending half the price of an I-phone for an android that is just as good, without any 3rd party additions. I am also very happy to be with a company that has no contracts. The AT&T thing is a definite killer in my book. Plus the extremely limited play store. The one advantage the Iphone has over android is much more robust and diverse app selection. With this Amazon is accentuating one of the weaknesses of the Android phone. (not as many good apps).

Plus, the price. no thanks. I am not paying that much for you to limit what I can do on my phone.