Amazon's Fire smartphone: Why it doesn't matter how cool it is

Amazon's slick new Fire smartphone boasts innovative features, but it's a niche product preaching to the choir.

After literally years of speculation, Amazon finally announced its own smartphone, the Amazon Fire, at an event in Seattle yesterday. The device boasts several innovative new features that go beyond what's currently available on other platforms, but for now at least, the Fire's awkward positioning and high price make it unlikely to lure masses of users away from their iPhones or traditional Androids.

I haven't yet seen the phone in the flesh, but published reports highlight features like Firefly's ability to recognize information and Dynamic Perspective's cool 3D effects. I'm especially interested in the headphones' magnetic properties that keep the cord from tangling. (I've bought plenty of crappy headphones over the years just because they came with a little plastic case that kept the cord tidy.)

How much do you love Amazon?

The question is how many consumers really want a device that ties them so directly to a particular retailer--even if that retailer is as big, as clever, and as useful as Amazon. I don't think so, unless that implicit deal is sweetened by a price significantly lower than comparable products.

That's been Amazon's strategy with its Kindle tablets, and things have worked out pretty well for Jeff Bezos and company so far. But the Fire starts at $200 with a two-year contract, industry standard for a high-end smartphone these days. That means the Fire has to compete on features and performance and win big enough to convince folks that it's worth being sucked deeper into the Amazon vortex. Not to mention making do with Amazon's relatively paltry app collection.

Some people will be OK with that, or even welcome it. Bezos said the Fire phone is aimed at Amazon's "most engaged customers," and that makes perfect sense. The phone includes a free year of Amazon Prime service, which normally costs $100. If you're already a Prime user--or want to be one--that's a significant savings. But how does that translate into high-volume sales? And how does it play in the enterprise, where Amazon Prime is not typically part of the corporate procurement process?

More to smartphones than shopping

Like many Americans, I'm an Amazon customer, though not an Amazon Prime member. But I'm not going to choose something as important as my phone based on an easier Amazon shopping experience. It's already plenty easy to buy from Amazon on any phone, and - sorry Mr. Bezos - I sometimes like to buy stuff from other sites, too.

Remember, though: the Fire is Amazon's first phone, and it makes sense to test the waters of such a crowded field with a niche product intended for your core customers. Amazon will likely learn a great deal about the mobile phone business from the Fire, and that education could help the company make subsequent devices more appealing to more people. 

As Amazon's tablet successes have already shown, however, the real secret is to leverage the long-term value of tight Amazon integration to lower the device's price. Saving $100 in exchange for being encouraged to buy stuff from Amazon is a far simpler and more powerful selling proposition than having to explain clever new features that may or may not be cool or important in the real world. Especially if that helpful Mayday button is mostly used to help people buy a pair of shoes on Amazon's Zappos site, for example.

Tags consumer electronicsamazon.comAmazon Fire PhonesmartphonesAndroid

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