By Greg Bensinger
Amazon.com Inc. unveiled its long-awaited smartphone Wednesday,
thrusting it into the highly competitive handset market.
The Fire Phone, as the device is known, boasts a 4.7-inch
screen, a 13 megapixel camera and earphones that resist tangling,
among other features, said Chief Executive Jeff Bezos, at an event
in Amazon's hometown of Seattle.
The device is Amazon's first smartphone and a big bet that it
can take on industry leaders Apple Inc. and Samsung Electronics
Co.
One potential advantage for the Fire Phone is unlimited photo
storage on remote computers through Amazon's cloud-computing
software. As smartphones have become many users' primary camera,
photos can suck up much of the storage, leaving little room for new
apps or music.
The handset business can be very unkind; once-highflying brands
like Nokia, Motorola and BlackBerry have seen their market share
erode.
Amazon will enter the fray with a powerful partner. AT&T
Inc. will be the exclusive carrier, according to people familiar
with the Seattle company's plans. The arrangement extends Amazon's
relationship with AT&T, which also provides wireless service
for Kindle tablets and e-readers. The move could help AT&T
attract new subscribers at a time of intense competition among
wireless carriers.
To succeed, Amazon will have to convert not only new customers,
many of whom are on multiyear wireless contracts, but also mobile
developers. The phone is likely to use a version of Google Inc.'s
Android mobile-operating system that doesn't have access to
Google's own Play store, with its million-plus apps. Amazon's
Kindles use such an operating system.
Some developers creating apps other than games who have seen and
used nonproduction versions of the Amazon handset said it wasn't
initially clear how they could use the eye-tracking software in
their apps. One possibility, these people said, is the software
could help improve mobile advertising placement, as well as app
design.
A phone would be the latest example of Amazon's expanding
hardware push, including its set-top box for streaming video, a
wand for scanning and ordering groceries from home, and an updated
version of its Kindle Fire tablet computer. The Fire lost ground to
rivals in the first quarter, falling to a 1.9% share of world-wide
tablet sales, from 3.7% a year earlier, according to researcher
IDC.
One potential advantage Amazon has over other handset makers is
its willingness to break even on hardware, relying on profits from
the services available through the devices. That is a strategy
Amazon has used for its e-readers and tablets, hoping to entice
users to buy more e-books and digital music and video. If Mr. Bezos
prices the smartphone near manufacturing costs, Amazon could
undercut rivals and attract users who can't afford higher-end
devices.
Amazon employees who worked on the smartphone device over its
several years of development said the 3-D screen is ideal for game
play and could have unique applications for mobile commerce, such
as 360-degree views of clothing, toys or other goods. Ultimately,
these people said, Amazon views the smartphone as effectively a
mobile cash register for purchases, including movie tickets,
e-books or diapers.
Because smartphones store a user's location and other personal
data, Amazon could gain new insights into owners' habits and
spending patterns to better tailor product recommendations and
manage its warehouse inventory.
Write to Greg Bensinger at greg.bensinger@wsj.com
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