Amazon.com's Streaming Box Is a Prime Example of Better Late Than Never

Amazon's streaming device has better specs than the competition, but it's real advantage is simply its brand.

Apr 7, 2014 at 12:30PM

Amazon Firetv
Amazon's new FireTV. Source: Amazon.com.

It's hard to question Amazon.com (NASDAQ:AMZN) these days. The company practically has the Midas touch in nearly everything it does. Dominance in e-commerce? Check. Disrupting the book industry? Check. Streaming content, original programming, tablets, audio books, cloud storage, and drones? Check. OK, so the drones haven't happened yet, but they're coming.

With the launch of Amazon's new Fire TV box though, investors may be left scratching their heads as to what sets the black box apart form, well, all the other black boxes, like Apple's (NASDAQ:AAPL) Apple TV. Sure the specs are better, but Amazon's advantage lies in its ability to court the masses.

Good specs but not fall-off-the-couch good
The Fire TV is a logical progression for Amazon. The company already has streaming video to rent and buy and produces original content, but it needed a device to put its service front and center, ahead of the likes of Netflix, Hulu, and others.

The Fire TV specs have been compared to smartphones with its quad-core Qualcomm processor, 2GB of RAM and dedicated graphics processor. The box is supposed to be three times as powerful as Roku, Apple TV, and Google's Chromecast, according to Amazon. Content load times are faster on Fire TV because of its internal storage and its ASAP feature, which predicts what you want to watch next and has it ready to go when your current program ends.

That's pretty nifty, as is Fire TV's voice search. Simply speaking what you want to watch was the next logical progression in set-top box content searching, and Amazon is one of the first to do it. But even with its stellar specs, there's nothing here that Apple, or even Roku, can't bring to market very soon -- or perhaps are already working on.

And then there's the game functionality. It's easily argued that having a gaming feature is a necessity, and Amazon says its $40 additional controller should appeal to the casual gamer. It's questionable whether gamers who just spent $99 on a set-top box will fork over an additional $40 to play games with the controller instead of just downloading a quick game to their tablet or smartphone.

Amazon Firetv
Yet another black box to add to the streaming mix. Source: Amazon.com.

Amazon's advantage
The interesting thing about Amazon's Fire TV is that it doesn't need to be tons better -- it just needs to convince the masses that it's the easiest set-top box to use. Though the streaming device market is already getting crowded with Apple, Google, Roku, and now Amazon, the streaming box market is still fairly young. Apple is clearly the leader right now, with the company selling about 10 million devices in 2013. But investors shouldn't underestimate Amazon's influence over its users -- or any industry, really.

Going to Amazon.com automatically brings up a letter from Amazon CEO Jeff Bezos talking about the new Fire TV. As an Amazon user, it's hard to skip over the message considering everything is stripped from Amazon's homepage just to talk about the device.

Herein lies Amazon's advantage. If you go to Apple.com, you probably want to browse Apple products. If you go to Roku's site, you're likely interested in its streaming devices. But if you go Amazon's site to buy a coffeemaker, well, now you know that they sell a streaming device. If you're the type of person who doesn't know much about technology or streaming devices, guess who just introduced it all to you? Amazon.

I think that's part of Amazon's secret sauce with the Fire TV. It didn't necessarily want the early adopters that Apple and Roku, and even Google snatched up. It wants to sell its device to the masses, who know and trust Amazon's brand. For the non-techies who already have an Amazon Prime membership for the free shipping, now here's a way to tap further into it. For devout Amazon customers who already have a Prime Membership, now there's a $99 device to make that membership even more worthwhile.

Think of all the readers in the world who care little for technology but love their Kindles because it gives them easier access to books. They didn't buy it because it was the coolest tech gadget, but because they trust Amazon and they like to read. Now Amazon is doing the same thing with people who like to watch television and like Amazon. It's a streaming box for the non-techies that even recognizes your voice. And, hey, it qualifies for free shipping, too.

One market Apple and Amazon aren't competing in... yet
Though Apple and Amazon are now goring head to head in the streaming box market, neither one of them have tapped into one of the most important tech markets growing right now -- wearables. An ABI Research report predicts 485 million wearable devices could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.

Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com, Apple, Google (A shares), Google (C shares), and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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