Amazon Fire 3D phone aims to quicken mobile sales

Amazon’s long-mooted entry into the smartphone arena aims to make it simpler to shop online with a “point and shop” option and a 3D display. But mobile experts are divided on whether the features are enough to convince shoppers to switch from rival phones and have a tangible impact on its ecommerce offering.

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The retailer’s “Fire” smartphone can identify QR codes, web addresses, phone numbers, songs, movies and books from a database of over 100 million products via a “shopping button” on the side of the phone.

Whether a novel is spotted on a friend’s bookshelf or a song on the radio, the phone’s “Firefly” image and audio recognition software will attempt to recognise it and take users to the product on Amazon.

The button ties to the phone’s “Dynamic Perspective” feature, which uses four infrared cameras on the front of the phone to display a 3D image in line with how they are looking at the screen.

Both features will be open to app developers to adopt with Amazon looking to mimic the success rivals Apple and Google have had by opening up their eco-systems to spur the generation of more engaging content.

The Amazon Fire’s mix of content, customer service and hardware builds on the strategy the company adopted for the Kindl Fire table as it looks to pocket a larger share of multiple revenue streams, such as mobile retail sales, mobile content and advertising

Amazon’s mobile advertising revenues are still nascent, and in 2014, Amazon will register just 0.3 per cent of the $33bn (£19.9bn) global mobile advertising market, eMarketer estimates.

In the UK, smartphone retail sales will reach £4.65 billion this year, according to eMarketer, approximately one-third of overall mobile retail sales. This figure will jump by 25.4 per cent in the US to reach $18.49bn (£10.9bn), representing 32 per cent of all mobile retail sales, including tablets.

Industry experts are divided on how the product will measure up to the competition, highlighting that a combination of a high price and the possibility of customers dismissing the phone as ‘too gimmicky’ could temper its ability to have a noticeable impact on sales.

Sucharita Mulpuru, vice president and principal analyst at Forrester, says: ”I’m not convinced that an Amazon phone is a home-run waiting to happen. Amazon is fundamentally three businesses: retail, media, and web services. Maybe they’ll introduce some product image recognition technology that helps you buy a similar product say, at a store, with one click on Amazon – but the truth is there’s very little friction to buying on Amazon even on other mobile devices now.

“Maybe you’ll get Prime bundled into the hardware price of the phone. But any observer should be looking for 2 things: what’s compelling for consumers and how is Amazon planning to not just lose a lot of money on it? Their pockets are not as deep as Google’s or Apple’s and investors need to recognize that reality.”

Geoff Blaber, vice president of research for the Americas at mobile analysts CCS, says: “Amazon is a low margin business entering an intensely competitive and cost sensitive business in smartphones. To justify that investment and to drive Prime adoption Amazon has to be differentiating through disruption rather than joining the status quo.”

“Amazon has been at the forefront of disruption in the hardware business but this announcement fails to repeat the impact of the Kindle or Kindle Fire tablet. This is contrary to the strategy of pricing hardware at cost to drive retail sales and service adoption – Amazon seems uncharacteristically caught between two business models.”

The smartphone launches next month (25 July) in the US for $200 (£117) for the 32GB and $300 (£176) for the 64GB version. It costs $649 (£381) unlocked to any network and all versions come bundled with 12 months of Amazon Prime at $99 (£58), offering a wide array of movies, TV shows, books and other products, as well as free shipping.

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