Amazon – No Fire sale

Expensive phone with no ecosystem does not make a hit.

• Amazon has launched its Fire smartphone but its cost and limitations will put a smile on the faces of Apple, Google and Microsoft.
• The smartphone Fire is a high end device with a HD screen with some funky 3D graphics effects, 2.2Ghz quad-core CPU, 2GB of RAM and 32GB of storage.
• The first problem is that the screen is too small for a device in this price category but I suspect that this is because of the limitations of implementing the 3D effect in a glasses-free manner.
• This is especially the case when considering the fact that the device comes at $199 from AT&T with a two year contract or $649 with no contract.
• Effectively Amazon is asking users to spend the same money that they would on an iPhone for a gimmicky device that has no ecosystem and very few apps.
• One cool feature is the ability to recognise an object via the camera and then take the user to the website to buy that item but I suspect that the novelty of this will soon wear off.
• Amazon is continuing to make the mistake of releasing the smartphone before its ecosystem is ready to make it compelling.
• This device is not going to pull users in as the device is the same price as the iPhone and then user has to pay another $99 to get access to the services.
• This will ensure that outside of the Amazon Prime ecosystem, there is no reason whatsoever to own this device.
• Furthermore, I suspect that a lot of Amazon Prime users already have a Kindle Fire and so this is not going to add very much to the ecosystem which is already very tablet centric.
• In the grand scheme of things Amazon’s ecosystem is tiny as RFM forecasts that it had 21.1m registered users at the end of calendar Q1.
• This is miles short of the 100m which RFM believes is needed for critical mass and hopelessly adrift of the magic 300m needed to make some real money.
• Having a credit card relationship with Amazon does not make the user part of its ecosystem but it does give Amazon an opportunity.
• Amazon needs to maximise that opportunity by making its ecosystem compelling and then release a handset not the other way round.
• The result of this launch will be a handset that ships almost no volumes and loses Amazon money.
• I remain unconvinced that Amazon has a real ecosystem strategy as its moves in this direction feel like random experiments.
• Until things become more coherent, Amazon is likely to remain a great retailer and a great cloud computing provider but nothing more.