No Matter Which Way You Look At It – The New Amazon Smartphone Is A Dud

Amazon Smartphone is a Dud
Why?

As a strategy – it is doing what Apple did with iTunes more than a decade ago – build a walled garden for your customers to play within.

The strategy rests on two assumptions – first, that the customers will not find a jailbreak, and the second that you have built a strong enough unique proposition to lure and keep the customers in.

Both those assumptions are flawed in this case.

First, if the hardware is good enough to attract the trendy users and pioneers undoubtedly jailbreaks will emerge.

But, that is a big if.

Besides OIS (optical image stabilization for the camera), there is little in terms of hardware to recommend the phone.

Sure, you could read a book in sunlight even while wearing sun-glasses – but how many people do that on a 4.7 inch screen.

Many of these features will be a lot more useful in a tablet – giving further boost to the kindle platform – which is really a platform more suited to Amazon than to Apple or Samsung.

As a tactic – it is merely a defensive move against being locked out by other smartphone creator. If Amazon thinks it will hand its customers a shopping machine that will fill its coffers with orders – it will have to think twice.

While no one made huge losses by underestimating the public intelligence – Amazon may not profit a lot from this move either. The key question is this – does this product enable Amazon to build a new business network, or help it significantly strengthen its existing business network to an extent that it will provide competitive advantage?

If the competitors you are thinking about are Walmart, or Costco, then the answer would be a qualified yes. Qualified because the device merely shaves off a few milliseconds off an activity that the customers might engage in – online price comparison of the goods on shelves.

Yet – how can the customer be sure that Amazon is giving them the best price on the net?

However, for most of the buyers of the device, the competitors for Amazon will be other on-line retailers and that is not a good news for Amazon. With the price differential between Amazon and many brick and mortar stores fast disappearing, savvy customers already know that they have to search beyond Amazon – perhaps in Nile (or eBay) – to get the best deals!

When it comes to digital content – it is a different question altogether.

That battlefield is full of old corpses, and, new lines are not yet clearly drawn. Perhaps there is some hope in Prime, after all – we can only wait and watch.

Finally, I will not comment on the execution because everyone has their own opinions on whether turtlenecks or jeans or both look cool. It probably does not matter – yet people can write tomes on this alone.

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  • Aiden says:

    Amazon may have a good phone but I never listen about the success of it as Apple and Samsung has the leader of the mobile phone market. So Amazon has right SCM strategy to grow in the mobile sector as Apple is succeeding into it?

  • Kristy says:

    The Fire Phone is a 3D-enabled smartphone developed by Amazon.com and manufactured by Foxconn. The phone was notable for its hallmark feature Dynamic Perspective: using four front-facing cameras and the gyroscope to track the user’s movements, the OS adjusts the UI so it gives the impression of depth and 3D. Other notable Amazon services on the phone included X-Ray, used for identifying and finding information about media; Mayday and the 24-hour customer service tool, then offering a way to buy recognized items through Amazon’s online store.

  • Quen Jena says:

    With a smartphone, Amazon is plunging into a crowded, well-established market. Most adults in Australia already own a smartphone, and of the more than 120 million devices sold in the U.S. in 2013, Apple and Samsung took 45% and 26% of the market-share respectively. To get a sense of how tough the smartphone market is, look at Microsoft and Nokia. Microsoft is the dominant software company on desktop computers. Nokia was the dominant feature phone company. And yet, together, they’ve failed to take any significant share of the smartphone market with Windows Phone.

  • Chelssa Messner says:

    Good blog Vivek. The question here is why is Amazon going to release a smartphone? Amazon has a long-term goal of being an everything company that lets its users buy more and more stuff more and more seamlessly. Amazon’s new phone will essentially be a branded portal for increased customer spending. This will also grab the attention of many new customers and would boost the interest of other potential customers and buyers.

  • Stelios Ratliff says:

    Well, my opinions say, Amazon thinks, Why the heck not? Fueled by Brad Stone’s pride in Amazon’s inventiveness and his stubborn refusal to cede even an inch of the tech landscape to other companies, Amazon is determined to release successful hardware products in the future. Amazon’s new smartphone will make it easier than ever for people to buy Amazon products online.

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