Coverage: Amazon unveils Fire phone

In an attempt to grab an even larger piece of customers’ wallets, Amazon unveiled its own smart phone Wednesday. The company recently rolled out a streaming music service and other new benefits for Prime customers, now it is taking aim at hardware.

The New York Times story by David Streitfeld pointed out that buying anything may have just gotten easier:

Amazon on Wednesday announced a device that tries to fulfill the retailer’s dream of being integrated into consumers’ lives at every possible waking moment — whether they are deciding where to go eat, realizing they need more toilet paper or are intrigued by a snatch of overheard music.

The device is a cellphone, but making calls on it got almost no attention at all at the event here in Seattle where it was unveiled. The Fire phone, the product of four years of research and development, offers Amazon fans the chance to live in an Amazon-themed world, where just about every element can be identified, listed, ranked, shared and of course ordered. It offered a view of a mobile future that will be alluring to some but might repulse others.

If the device works as described, and Amazon entices even a small portion of its 250 million active customers to buy one, the Fire could accelerate Amazon’s already intense competition with other retailers and tech companies, not to mention heightening some of its current battles with suppliers.

Greg Bensinger called the device a “mobile cash register” in his piece for The Wall Street Journal:

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.

Bloomberg Businessweek’s story by Joshua Brustein had this background about Amazon’s recent moves:

The Fire Phone is the second space-age shopping device to come out of Lab 126, Amazon hardware division, so far this year. A wand called the Dash, available only on a limited basis, allows users to scan grocery items. The Fire Phone is the same thing, but with a chance of reaching the non-wand-buying masses.

The pressure to do something like this has been mounting for years. Without its own hardware, Amazon couldn’t create its own shopping apps without sharing the proceeds with intermediaries, such as Apple, which takes a cut of each purchases made on iPhone apps. Amazon has always survived on tiny margins—letting another company take a big cut was apparently a bridge too far.

The smartphone market has gotten too big for Amazon to ignore. There will be 1.76 billion smartphone users worldwide this year, according to eMarketer, and the number of new smartphone customers is growing rapidly. But a fast-expanding market isn’t necessarily easy to break into. Apple and Samsung dominate, accounting for about 70 percent of U.S. smartphone sales. Rival products, such as HTC’s (2498:TT) One and the Nokia (NOK) Lumia have been well reviewed without making much of a dent.

Donna Tam wrote for CNET that the strategy was designed to pull people further into Amazon’s retail web:

Amazon’s move into hardware beyond e-readers and tablets fits into an overall strategy of selling customers devices that make it easy to shop from Amazon. It further pits the e-commerce giant against its rival tech titans and gives Bezos another way to lock customers into Amazon’s massive retail ecosystem. As with Amazon’s other devices, the Fire Phone will run on a modified, or forked, version of Google’s Android operating system.

“Fire is the only smartphone to put everything you love about Amazon in the palm of your hand,” Bezos wrote in a note on Amazon’s home page.

Some consumers might love the integration, while others might find that being pushed to buy every time they touch their phones, well, off-putting. While many of the features sound amazing, the fact that Amazon will continue gathering data and pushing products may not be for everyone.