Amazon Fire Phone - A smart device with wrong timing

The Fire Phone is a smartphone designed and developed by Amazon. It was launched on June 18, 2014.  Loaded with several features such as Dynamic Perspective, Firefly. Amazon claims that it helps users see and interact with the world through a lens. Other two key main features for this phone are eye-catching 3D (well, not sure if 3D is eye catching anymore) and deeply integrated Amazon buying features, where Amazon thinks to capitalize heavily.

The device features a 4.7 –inch HD display, a size ideal for single-handed use. An ambient light sensor and a feature called Dynamic Image contrast to make the screen images looks perfect in various viewing situations. Gorilla Glass 3 is available from front and back with 720p resolution. It comes with front and back cameras, which can capture video in 1080p and Dolby Digital Plus surround speaker’s audio. The Fire Phone is an AT&T exclusive, costing $199.99 with two-year contract or $649.99 off contract price.

What it looks like is Amazon’s main strategy behind this phone is not making the money on selling the phone but selling entire Amazon business through the phone, quite a clever strategy. Amazon is already coming up with marketing plans to reach out many consumers on the day one it goes on sale. One such offer is one-year Amazon Prime service, which is another marketing gimmick; but does anyone need this as many hardcore Amazon customers do already have the prime membership? 

One key missing feature is mainstream customers will not be able to access the Google Play store, a major blow for customers who are very savvy of millions of new apps. Amazon for obvious reasons would like to sell all content through Amazon’s app store and build an echo system. But in reality, Amazon barely has 250,000 apps, which is just a fraction of the apps on iOS and Google Play (1.2 million apps). As a result customers who have substantially invested in either of these echo systems will not be interested in the Fire Phone. Even new customers will be hesitant to buy the phone if it does not run the key apps they are interested in. 

Deep integration of buying needs in the phone is not something the customer is really looking for, buy almost everything on web feature comes along even with iPhone and android phones as well.  They have already developed superior Amazon and other Amazon specific apps.

Looking at these factors and already saturated smart phone market where two dinosaurs iPhone and Samsung being in the leaderboard, most likely the Fire phone will not be a hit. According to early reviews, regardless of the bells and whistles, Amazon is walking down on a difficult path. The Fire Phone is available only through AT&T and many are not happy with AT&T due to weak signal and price is also not competitive. Battery life is average and may last just one full day as long as no Dynamic Perspective and Firefly features are activated.

The big question now is whether the strategic rationale behind the Fire Phone in theory is solid but will it play out in practical? The irony is Amazon likely doesn’t know, and matter of fact we will likely never know, because Amazon usually doesn’t share any of their sales data. If the sales still exist even after a year from now, and especially if it gets a successor, then we will say that Amazon has succeeded. If it gets quietly discontinued, then it has failed. Time will tell us.

Good luck Fire Phone and good luck Amazon.

Jeff Bezos - Founder and CEO of Amazon.com

Jeff Bezos is the founder and CEO of Amazon.com, a pioneer in changing the retail industry into a new dimension. He is a graduate from Princeton University and had a lucrative career on Wall Street. But this is not what he wanted to do for rest of his life, so packed his bags and moved to his garage in Seattle where he started something different, an online bookstore Amazon.com, which eventually became the biggest online e-commerce retail store. His vision is simple, customer, customer and customer. He always sets plans to the customer’s benefit and believes that if the company’s focus is on the customer it will make the company a market leader. Bezos revolutionized so many things but these are the three areas in particular that has significant impact on people’s life, 1. “Bring retail stores to customer homes”, 2. “Deliver any book in 60 seconds or less through Kindle” and 3. “Keep IT costs down with web services and cloud computing”.

Bezos brings retail stores to customer homes

“The customer is always right”, using his three principle that he had relied on, “Put the customer first, invent, and be patient." Bezos, perhaps more than anyone, has taken that mantra into the digital era, figuring what customers want before the cash register rings. Bezos is even stricter about what customers don’t want, they hate delays, defects and out-of-stock products, so Amazon constantly collects metrics, and tracks those numbers to make them as rare as possible. Bezos does not hire any third parties to collect customer feedback. He developed a system where customers can write the feedback directly. Bezos forwarded to Forbes a note from a woman recounting how Amazon has touched her life over the past 12 years. First she bought books and compact discs when she was in her late 20s. Now, she writes, Amazon is “helping me choose a mattress and a crib for my son.” She concludes by writing: “Thank you so much for making my life simpler and easier. … They say it takes a village, but, in this case, all a mom needs is Amazon, her Amex and an iPhone.” One of the top leadership lesson’s from Bezos is “base your strategy on things that won’t change” like selling perfumes, fishing rods, e-book readers and data storage etc. It is all part of one big plan with three big constants: offer wider selection, lower prices and fast & reliable delivery. 

Bezos delivers any book in 60 seconds or less through Kindle e-book reader

Bezos strategy is “determine what customers need, and work backwards”. He believed millions of people would want a crisp e-book reader that could download any book in 60 seconds or less, so he can close geographical barriers, a “Kindle” has born, invention of Kindle is defined by customers’ desires rather than engineers’ tastes. While all other executives in the company had slim hopes for the success of such device, Bezos never looked back. When one of the finance executives asked how much he was prepared to spend on the project, the CEO shot back: “How much do we have?” this shows how much he believes in new innovations and his judgment. One of the investors when questioned on Kindle slim profit margins, he explained Amazon's strategy, adding to what is well know about the company's business model: "We want to make money when people use our devices, not when they buy our devices.”

Bezos keeps IT costs down with Web Services and Cloud Computing

After dot-com boom and crash, Amazon’s performance was flat between 2003 and 2007, though the revenue is increasing steadily but due to high operating expenses the company’s profit margins are very slim. Then Bezos took a complete different angle, quietly building a multitude of new growth engines inside his company, all were rooted in the same theory. If Amazon lets customers set the specs, it could conquer any number of consumer products and services. In 2006 he launched Amazon Web Services (AWS) as a standalone business. It rang up whooping estimated $2 billion in revenue last year. It serves customers ranging from NASA to Netflix with dozens of cheap, on-demand computer services via the “cloud computing”

Conclusion

By making Amazon's stock to all-time highs during the past year, Bezos effectively hushed critics who worried that the company was spending too much on technology and shipping discounts. Now, the company he founded 15 years ago is firmly focused on exactly the kind of new ventures that Bezos relishes. Whether it's online retail service, the Kindle e-book or cloud computing services, Bezos is committed to develop new kinds of revenue streams for the digital future. Bezos is a great inspirational figure in the business world.