Amazon's Fire phone launch: Hits, misses, and takeaways

Amazon's dynamic perspective and Firefly could be hits with developers, but ultimate sales remain to be seen. One disappointment: Amazon didn't upend the traditional carrier business model.
Written by Larry Dignan, Contributor

SEATTLE — Amazon's launch of its Fire phone brought a 3D display system dubbed dynamic perspective, Firefly (which could turn the device into a kiosk in your pocket), and showed signs that the company can innovate on the hardware front and leverage its Prime subscription base and ecosystem. Unfortunately, some of the questions going into Amazon's launch have gone unanswered.

CEO Jeff Bezos delivered a strong performance and noted that the company's hardware strategy — just like Amazon's e-commerce and cloud ventures — revolve around the customer. Bezos said:

The most important thing that we've done over the last 20 years is earn trust with customers. We've worked hard to do that. You don't ask for it. There is a simple recipe for earning trust: Step one, do hard things well. Step two, repeat. You have to do this thousands of times over and over and over. If you do that, customers notice.

Amazon chief executive Jeff Bezos.
Image: CNET/CBS Interactive

Bezos' point with the Fire phone is that Amazon sweated the small things and launched features that with developer help could serve as strong evidence of the company's innovation. Going into the event, I highlighted six questions about the Fire phone effort. Let's revisit those questions and go over what we learned on Wednesday in Seattle:

Can Amazon's smartphone be more than a niche device? Amazon's channel and sales promotion means that the Fire phone can do well. However, I wouldn't be the first in to buy the Fire phone. Why? I need time to get used to the dynamic perspective technology and Amazon didn't dangle much on the pricing front to entice me. Amazon can grab share, but look for the Fire phone momentum to build over time. There's also a learning curve since 3D effects will take time to get used to. You'll either love or hate it. I wonder about how much training AT&T reps can give to close a sale. Amazon has done a few innovative things, but you'd need to spend a few days with the phone to really gauge if it was for you. 

Will Amazon walk that line between walled garden helpful and handcuffing customers? Firefly is the technology that most epitomizes the Amazon approach. Firefly is Shazam for everything and can surface Amazon's vast treasure trove of data as well as prod you to take action. Rest assured that one key action will be to buy something. Since Amazon's Fire phone is really built for Prime subscribers — newbies even get 12 months of Prime included — the company can make its world enjoyable for customers while making impulse purchases friction free.

Fire's success depends on developers

Hardware specs: Quality parts

Is there telecom business model innovation? The biggest disappointment of Wednesday's launch was that Amazon followed the typical smartphone model and, to make matters worse, went with an exclusive deal with AT&T.

Amazon could have included 1GB of data with a Prime subscription. The phone could have been less than $199 with a two-year contract and further subsidized by advertising or content sales. Amazon's approach with AT&T was plain vanilla. The model with the Fire phone is a missed opportunity. 

Rob Williams, vice president of software at Amazon, said that AT&T was a key development partner. "When bringing your first phone to market need to work deeply with a carrier partner," said Williams. 

firefly pricing

How does a smartphone really boost Prime subscriptions, e-commerce and customer engagement? The Fire phone is really an engagement device. There's no question that the Fire phone will drive engagement, sales and customer service. Little additions like the Mayday button will differentiate the device. My hunch is that the Fire phone will be a Prime subscriber's dream.

Does 3D sell? The science behind dynamic perspective is impressive, but color me a tad skeptical. For pictures, Amazon's 3D efforts will be fun. Mapping is also interesting. Other categories are more dicey. The linchpin to Amazon's dynamic perspective will be developers. If developers take the 3D ball and run with it, Amazon has technology that other smartphone vendors will struggle to match. To me, it's a coin flip whether Amazon's dynamic perspective technology is a differentiator or gimmick.

Can Amazon's ecosystem, hardware approach and applications make it a No. 3 platform? One surprise in the Fire phone event was that Bezos was talking to developers as much as he was customers. Dynamic perspective and Firefly both have software development kits. What's interesting here is that Amazon's technology is custom to its Fire phone because of the sensors required. Technically, the new Fire features don't utilize Android, but Williams said any current developer will be able to easily add dynamic perspective and Firefly hooks. 

Simply put, developers will have to bet on Amazon and its ecosystem. Amazon has one part of the equation right: Developers win the day.

It's possible that Amazon could catch up to Windows Phone in terms of applications, but the company will need more distribution to effectively gain share. The exclusive deal with AT&T limits Amazon's advance for now. It's not a big stretch to see Amazon in five years as a No. 3 player behind Apple and Android.

Expect a big Seattle-area rivalry between Amazon and Microsoft on the mobility front.

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