By Greg Bensinger
SEATTLE-- Amazon.com Inc. long-awaited smartphone, unveiled
Wednesday, boasts features like a screen with holographic images,
hands-free scrolling and software that can recognize merchandise
and art through its camera lens.
But it may be more like a mobile cash register, part of an
Amazon strategy to boost sales of digital music, videos and
merchandise from its namesake e-commerce site.
At an event here, Amazon Chief Executive Jeff Bezos demonstrated
features the company hopes will distinguish the phone in a crowded
market now dominated by Apple Inc. and Samsung Electronics Co.
The Fire Phone, as it is known, has four cameras that can track
faces to show images that appear to have depth similar to a
hologram, and allow users to scroll through Web or book pages just
by tilting the device.
At $199 to $299 with a two-year contract, the phone being
released July 25 undercuts Apple's equivalent 32-gigabyte and
64-gigabyte iPhone 5S handsets by $100 each. That is a potential
advantage for price-sensitive consumers. Without a contract, the
Fire phone will sell for $649 to $749, according to Amazon's
website.
The phone has a 4.7-inch screen--slightly bigger than Apple's
iPhone--a 13-megapixel camera and earphones that resist tangling,
among other features, Mr. Bezos said.
"We're trying to do something different and better," Mr. Bezos
said in an interview. "There is a group of customers who will find
these features useful and adopt them."
Demonstrating a feature called "Firefly," Mr. Bezos showed how
the device's camera and sensors can recognize merchandise, signs,
music or television shows.
"You can take action in seconds," he said, hinting at the
commercial applications. A user, for instance, could point the
phone at a pack of gum and then order it. The user also could point
the phone at a painting to learn about the artist and other
facts.
"Commerce is the reason Amazon is getting into what is so
obviously one of the most difficult markets, which is smartphones,"
said James McQuivey, a Forrester Research analyst. He said the
phone "will create such a tremendous commerce opportunity at any
moment."
Mr. McQuivey likened the Fire phone to Amazon's introduction of
one-click checkout on its namesake website in 1997. "That just made
shopping online so much easier. Now you'll have that easy checkout
right in your pocket."
In another sign of Amazon's commerce strategy, the phone
includes one year of free membership in its $99 Prime program,
which offers free two-day shipping as well as online video
streaming.
The phone follows other Amazon devices introduced this year--the
Fire TV set-top box and a wand for scanning groceries--that promise
to make shopping easier and quicker.
The Fire phone will work exclusively on AT&T Inc. 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 gain market share, however, Amazon will have to convert
millions of customers loyal to iPhones or Galaxy smartphones who
are under two-year contracts. That is a tall order, considering
Apple and Samsung alone commanded 46% of the world-wide smartphone
market in this year's first quarter, according to IDC.
In the interview, Mr. Bezos sought to play down competition from
Apple and Samsung. "If we'd been talking five, six years ago, we'd
be talking about a whole set of other players," he said.
Amazon also will have to attract developers for apps. The phone
will use a version of Google Inc.'s Android operating system, but
won't have access to Google's Play store, with one-million-plus
apps.
The handset business can be very unkind; once-highflying brands
like Nokia, Motorola and BlackBerry have seen their market share
erode.
With its tablet computer, Amazon has lost ground to rivals in
the first quarter, falling to 1.9% share of world-wide tablet
sales, from 3.7% a year earlier, according to IDC.
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.
Amazon shares rose 2.7%, or $8.76, in Wednesday trading on the
Nasdaq Stock Market, to $334.38. The shares have fallen 16% so far
this year.
Amazon has shown a willingness to break even on hardware,
relying on profit 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.
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.
Write to Greg Bensinger at greg.bensinger@wsj.com
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