Last week Amazon launched its first smartphone – the Amazon Fire. What’s interesting is how the company has bundled free Amazon Prime as part of the phone package, signalling its intent to take more ownership of the m-commerce and streaming media space by guaranteeing free and speedy fulfillment of mobile purchases, free ebooks and access to a large library of films and TV shows. It’s a bold move and shows how, by creating its own mobile ecosystem, customer value can be derived from the mobile service and user experience level rather than differences in the device OS.
Here we’ve asked MEF members and the wider mobile industry to provide comment on the smartphone market’s latest entrant.
Monetization and Engagement also has its own Meffys award category this year. The entry process has just opened and for this category judges will be looking for companies which provide technology or services that help increase consumer engagement and drive monetization via mobile.
Senior VP, Products
Florent Stroppa, Senior Vice President, Products, OnMobile
Last week, Amazon launched its Fire Phone with a number of impressive features: a “3D” screen, Firefly, Mayday and a full-year of Amazon Prime. What could really set it apart is a not yet official feature, Prime Data.
Amazon has been working quietly on a new business model for mobile data access for years. Some rumours say that data access to Prime Data will be free. A few years ago you could download ebooks for free on the first Kindle. Now Amazon could include all data usage as part of Amazon Prime. As a consequence, instead of paying your mobile operator, you would pay Amazon for data and content.
The Amazon Fire is technically impressive but it is the business model that could surprise us. Amazon could become a new kind of operator with an even more vertically integrated model than Apple.
Marco Veremis, CEO, Upstream
Amazon has now entered the smartphone battleground with the unveiling of its first mobile device, the Amazon Fire. The move will give Western consumers another handset to consider in the very-crowded smartphone marketplace, and while the 3D functionality may appeal to Western consumers because of its innovation, will Amazon achieve the cut-through it needs to make the product a global success?
While the device may not compete with the hardware giants of Apple and Samsung, it may serve its own purpose of promoting Amazon’s online marketplace through better imagery to Western consumers. However, in India, Nigeria, Brazil, Vietnam and China, only 21% of consumers currently spend or want to spend money with Amazon (Upstream’s The Next Mobile Frontier Report).
Therefore, rather than creating products to reinforce an already successful marketplace in the West, Amazon needs to look to emerging markets if it wants to become a leading online marketplace worldwide. This is perhaps a more strategic priority to grow in the regions where Amazon is falling behind opposed to continuing to stick to areas of strength.
Richard H Harris
Group Chief Executive
Richard H Harris, Group CEO, Ensygnia
Amazon’s entry shows that the globally dominant Internet brands all want a mobile device presence – Google, Apple, Microsoft and Amazon are now all represented. These companies are not in the space to provide traditional connectivity. Rather they recognise that the mobile device is fast becoming the global centre of consumer interaction and customer contact – and not just in the developed world.
Strangely – and although we are looking here at a device launch – this is not about the device itself. This is about owning the customer and Amazon looking to capitalise on a relationship it has, as a global retailer, with its existing customers. A relationship that the network or a pure device company can never rival.
What’s more, growing market share and achieving any differentiation through the device itself will – from a pure technology viewpoint – become increasingly difficult. It will be the services, features and functionality that are embedded within devices that will make the difference. Ease of use and trust – especially from a mobile commerce point of view – will be high among those factors that make a difference and Amazon will feel it has a head start in that area.
Matt Graham, Tech Consultant, Apadmi
The new features enabled by the new SDKs provide interesting opportunities. It will be interesting to see how existing apps will integrate with the device and how Amazon will encourage developers to make use of the Fire Phone-specific features.
The commitment to providing a compelling and engaging customer offering, through the inclusion of Amazon Prime, is admirable and signals the entry of a brand that has potential to pack some serious punch. However Amazon risks diverging too far from the base Android platform, which could make life difficult for developers, putting constraints on what consumers can run on the device and could turn some customers away.
EVP of Global Partnerships
Nishat Mehta, EVP of Global Partnerships, dunnhumby
Customer loyalty is built from superior customer experiences. In the past, retailers have been able to control all aspects of this experience from products, pricing, promotions and service. Amazon came along and disrupted that by offering customers a show-rooming experience on their mobile device while inside of another retailer. Ironically, Amazon is now seeing competition from Google, using PLAs to direct customers to e-commerce retailers other than Amazon.
The Fire phone is a way to try to regain some control over the conversation Amazon wants to have with its consumers, and the mobile phone is the best way to do this, especially, for the dominant player in mobile commerce. Features including Firefly, Dynamic Perspective and unlimited photo storage are necessary to try to differentiate from the dominant players in this market and improve upon the mobile commerce and media experience. Given Amazon’s tendency for low margins, I was hoping for a more radical price point, although the free year of Amazon Prime was a nice touch.
It is very difficult to break into the mobile platform space, but given the importance Amazon places on its relationship with its customers, it needed a way to communicate with them without anyone else getting in the way, now or in the future. Risky but very bold.
Peter Woodd, CEO, IDT Systems
With Amazon.com launching a Smartphone of its own, the vibrations running through the technology industry are palpable. The effect this will have on the Smartphone industry are substantial. Consumers are constantly looking for the newest and most innovative device and if Amazon’s Smartphone offers the suggested 3D viewing capabilities, the usual players may find their hold decreasing.
In an industry as volatile as this, the accessories market needs to do its utmost to keep up. Consumers are getting impatient; the minute a phone is released, they want the accessories to accompany it and expect to be given a choice to make it their own. With these brand new devices entering the market, accessories haven’t been mass produced as yet, but retailers need to be prepared, forward thinking and plan for what might be the next big thing … or the next three minute wonder.
Director and Co-Founder
Dan Norris-Jones, Director and Co-Founder Priocept
Amazon might be one of the world’s largest digital brands, but it was a brand with an identity crisis even before this new initiative. A brand that has always had very strong associations with books, grew to become associated with all things “e-commerce” and “online retail”, but as a result has ended up with a very cluttered and confusing web presence, covering everything from an online bookstore to a “marketplace” that tries to compete with eBay.
Adding a smartphone to Amazon’s portfolio seems to just exacerbate the problem further, moving them into a market where they will compete with Apple and Samsung’s much clearer positions and product strategies.
Consumers no longer understand who Amazon are, what they are good at, or what they are offering. Amazon would be well served to focus and strengthen their positioning in the areas that really matter to them and to their customers, rather than throwing yet more product offerings at the wall and hoping they stick.
Head of Communications
Erik Lorentz, Head of Communications, PriceSpy.co.uk
Whilst we believe there is still a distinct void between smartphones and shopping, Amazon may be limiting the rise of mobile retail by only featuring Amazon.co.uk listings.
Usage statistics of our smartphone app that compares prices on over 3.9 million products in more than 1,900 shops (of which Amazon is included) show that Amazon is not always the cheapest choice.
It should be a priority for any online shop to create a streamlined and secure shopping experience. Amazon Prime may be an added luxury, and the Firefly feature could have some use in standard retail vs online prices; however, Amazon’s reliance on urging customers to use their shop could ultimately prove its downfall. Ultimately, a customer requires not just choice in products, but a choice in prices.
Client Director, Mobile
Jeremy Sigel, Client Director, Mobile, Essence
Despite being loaded with innovative features and priced competitively, I would bet against Amazon dethroning Apple or Samsung anytime soon. Apple and Samsung are hardware manufacturers first. Apple emerged as a content-distribution giant in order to support its hardware sales. In contrast, Amazon is creating hardware in order to support their primary business: selling products and services. Case in point, the Amazon Fire includes a free year of Amazon’s Prime $99 shipping and content service. While this may be a viable strategy according to the balance sheet (i.e. taking a loss on hardware to sell more content), it is not one that will rival premium hardware manufacturers. Recent history suggests this is true. While marketing dynamics between tablet and smartphones are different, Amazon currently makes up just 1.9% of the tablet market share, compared to Apple 32.5% and Samsung 22.3%.
Very recently, Nokia and BlackBerry dominated the smartphone market. In 2006, Webster made “Crackberry” its word of the year and by 2009 Blackberry had 44% market-share in the US. In 2010, Nokia still had 60% of the global market share. So, in answer to whether another brand – that’s not necessarily mobile first – can enter the marketplace and become a key player? Simply stated: Yes. To quote Heraclitus: “The only constant is change.”
Gareth Davies, CEO, Adbrain
The launch of the Fire Phone is aligned with Amazon’s long game – collecting user data. Amazon already has incredibly rich data on consumers’ purchasing habits; if it sells a decent number of Fire Phones it will be able to combine that data with the rich behavioural and location data inherent to mobile and sharpen both its advertising and retail propositions.
It all comes back to the shop in the end.
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