How Hot Is Amazon's Fire?

Online retailer Amazon aims to capture some of the smartphone market with its Amazon Fire smartphone, released in late June, which has so far been met with mixed reviews.

The phone and many of its features have largely been called gimmicky at best. Take, for example, the new gesture-controlled interface, which some experts say looks impressive at first glance but will be difficult to support in the long run.

Sven Montanus, head of product development at B2X Care Solutions, a European provider of customer care for electronic devices, points out that the additional cameras and sensors needed for such interactions could become a real challenge for repair providers both operationally and financially.

But that's not to say that the Amazon Fire doesn't have potential. "This is Amazon's first phone. Like with the first iPhone or first Android, it gets better every year," predicts Jeff Kagan, a wireless industry analyst.

In the meantime, many have taken issue with the phone's price, which was listed at $649. The Fire phone was expected to cost far less, with Amazon making most of its money not on hardware sales but on all of the additional products Fire users would be buying from Amazon.

Key to Amazon's revenue and profit generation strategy for the phone is Firefly, an advanced image, text, and audio recognition technology that enables users to scan and identify products, songs, movies, TV shows, and more. Once Firefly identifies the item from among the more than 70 million products, 35 million songs, and nearly 250,000 movies and TV episodes that it recognizes, it takes the user to Amazon.com to buy those items.

And while analysts don't expect the Fire phone to have a major impact on the traditional wireless marketplace or provide a serious challenge to Apple's and Samsung's market dominance, from a CRM standpoint, many hail this as a smart marketing ploy by Amazon.

"I look at the Amazon Fire phone differently than I look at the Apple iPhone or Google Android," Kagan says. "It is another way for Amazon.com customers to spend money through the Amazon.com network. It will help Amazon.com sell more stuff."

The phone will also help Amazon capture more impulse buys, Kagan expects. "Many customers think they will order something when they get home, but by then they change their minds. This way they can order when they see something. This way Amazon sells more stuff. That's what the Amazon Fire phone is all about," he says. While Amazon Fire will certainly make it easier for consumers to buy things in an instant with their smartphones, to truly shake up the e-commerce world, many say, Amazon would have to open Firefly to other service providers, such as Google Shopping or eBay. Amazon isn't likely to do that just yet, because that would send sales somewhere else, no matter how good it might be for the consumer.

For now, Firefly depends almost entirely on Amazon's database of products, and keeps the results exclusively within the Amazon environment. If Amazon doesn't have it, the user is probably out of luck.

Beyond that, Montanus, like many others, says Amazon will have serious challenges trying to succeed in a market where user behavior and habits have been formed and dominated by Apple, Samsung, and Google for nearly a decade.

However, it's a big market with a lot of opportunities for a serious mobile contender. Research firm IDC predicts robust growth in smartphones sales, which it says could reach $451 billion by 2017, up from $338 billion this year. The firm projects sales of 1.7 billion smartphones globally by 2017. With the sales volume that smartphones are hitting, even a small share could mean a sizable windfall for Amazon.

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