Amazon has made its Fire smartphone too expensive

Almost three years after Amazon got into the Android device game with the Kindle Fire, the giant etailer has finally decided to take the plunge into handsets with a smartphone simply named Fire. The Fire has many novel features but the main point of it, surely, is to encourage as many people to conduct as much m-commerce as possible through Amazon. So the decision to position it as a high-end device is a strange one.

The Fire will initially launch exclusively with AT&T in the US and the 32GB version will cost $199.99 on-contract or $649.99 SIM-free. To put this into context that’s exactly the same price as an iPhone 5s, a Samsung Galaxy S5, an HTC One (M8) and most other flagship smartphones on AT&T. It must be noted, however, that the Fire comes with 32GB of storage while the other flagship smartphones start at 16GB of storage. At current exorbitant embedded smartphone flash storage rates that equates to $100 of bonus flash, which is not insignificant.

Comparing other hardware specs, it has a 4.7-inch screen, which is currently considered the minimum for flagship smartphones (with one exception, and that’s expected to get into line sometime in Q3), and the screen resolution is 315 PPI, which is less than most of its competitors. The Snapdragon 800 SoC is powerful, but slightly less so than the 801 found in the Samsung and HTC equivalents and the 13MP, 1080p rear camera is competitive.

But the mere fact that we’re comparing prices and specs with other flagship smartphones is the problem. Amazon managed to grab a nice early chunk of market share when it launched the Kindle Fire by effectively selling it at cost, or less. Amazon’s business is retail, not products, and it only makes products, such as the Kindle, as a tool for generating more retail business, such as e-books. If the aim is to get the Fire into the hands of as many consumers as possible, then why make it so expensive?

Especially since the Fire is not about the hardware anyway. The OS is essentially the same forked version of Android you find in the Kindle Fire, although a new feature is something called “dynamic perspective”, which is a kind of 3D effect that gives you a slightly different view of an object if you tilt the phone, apparently. Tilting also allows some degree of navigation, such as scrolling, although it’s still not clear why that’s preferable to good old thumb navigation.

The signature feature, however, is called Firefly. This uses the rear camera to identify real objects, and even the microphone for real sounds, and then offer up more information or, critically, an Amazon.com buy link. This technology already exists, of course, with apps like Google Goggles and Shazam, but Amazon has unified it and integrated it into a seamless buying experience apparently designed to make impulse purchasing even more… impulsive. To further entice people into trying to buy everything they see or hear, Amazon has even included a special hard button to launch you instantly into retail heaven.

That’s all fine, of course you expect a piece of Amazon hardware to be geared towards optimising the Amazon experience, but the flip side of this Faustian pact is supposed to be a low price. You accept the device’s constant inducements to spend money on Amazon as a trade-off for the bargain price of the device. But Amazon seems to have decided that $100 of extra flash, and an introductory annual subscription to Amazon Prime, are sufficient compensation for your immortal soul. We don’t.

But perhaps we missed the point. So we checked in with Neil Mawston, Executive Director at researcher Strategy Analytics and he pretty much agreed. “Amazon’s Fire smartphone is a mild disappointment. Retail pricing is on the high side, its hardware design is unexciting, the apps ecosystem is relatively limited, and the number of carriers stocking the device for the first-generation model is tiny,” said Mawston.

He makes a good point about the app ecosystem. Because Fire OS is a forked version of Android, it doesn’t get access to the Play Store, which is another concession Amazon is asking of its punters. “Amazon’s Fire smartphone has a modest apps ecosystem, and no direct access to the huge Android Play store,” said Mawston. “Amazon will struggle to convince app power-users to switch from the full-fat experience of Apple or Samsung to the low-fat experience of Amazon Fire.”

We are also in agreement on the Firefly app, and it’s worth noting just how much of a further threat this makes Amazon to bricks-and-mortar retail, as now people can just take a look at a product in-store and potentially buy it online for less with just a couple of clicks. “The Firefly app looks interesting,” said Mawston. “High-street retailers, like Tesco or BestBuy, will be worried because Firefly will accelerate the trend towards showrooming. Browsing offline, but buying online.”

To summarise, Amazon’s big move to help it dominate m-commerce as much as it already does e-commerce is the launch of a high-end smartphone with insufficient unique value to compensate the end user for the concessions they have to make. The main question Amazon had to answer was: why should someone buy this phone instead of an iPhone, Galaxy S, etc? 3D effects and an Amazon button do not answer that question convincingly, but significantly better ‘bang-per-buck’ might have. As the first Android tablets found to their cost, if you want to take on the incumbents, merely matching them is rarely enough.