2 More Clues on Amazon.com, Inc.'s Smartphone Strategy

Amazon launches its phone next week. What tricks does the e-commerce giant have up its sleeve?

Jun 10, 2014 at 9:45AM

Habitual disruptor Amazon.com (NASDAQ:AMZN) is preparing to launch its long-rumored smartphone next Wednesday, June 18. The e-tailer will need several facets of a broader cohesive strategy in order to successfully compete in a world dominated by Apple (NASDAQ:AAPL) and Google. Here are two more clues on what Amazon could be planning.

Developers, developers, developers
Amazon has been offering invitations to the launch event on its home page for the past week. It asks if you are a customer, developer, or journalist. Interestingly enough, if you indicate that you are a developer, the company prompts you with a handful of questions:

  • "Describe an innovative way in which you have used gyroscopes, accelerometers, or other device sensors in your app development."
  • "Are you interested in developing apps utilizing a new type of sensor?"
  • "Do you have machine learning experience? Please describe."

Investors have been hearing for years that the device will feature some new 3-D interface, and seeing testers experience it does stoke the curiosity of what it will actually look like.

Just about all modern smartphones already feature micro-electrical-mechanical sensors, or MEMS, like gyroscopes and accelerometers. Those types of sensors aren't new, and are simply table stakes in 2014. Amazon references a "new type of sensor" that could up the ante if its interface truly proves revolutionary.

Last week, TechCrunch reported that Amazon is using Omron's Okao Vision technology to track head motions. Amazon had an internal team modify the technology for its specific purposes, which is to create a stereoscopic or parallax effect from a regular LCD display.

As far as the machine learning reference is concerned, tech heavyweights have been putting a lot of emphasis on deep learning recently. Deep learning falls under the broader umbrella of machine learning, and companies like Apple, Google, and Facebook, among many others, have been scooping up deep learning talent. Amazon has similarly been hiring up machine learning scientists to work with many of its products (including mobile devices) and services.

Payments, payments, payments
We've discussed the possibility of Amazon using a Prime Data service of some sort to help sell the device. On Monday, Amazon unveiled new features for its Amazon Payments service. Amazon Payments has been around for a while, challenging eBay's PayPal, but the latest push could have additional implications for Amazon's mobile ambitions.

Amazon will dramatically broaden the number of third-party merchants and allow subscription billing (as opposed to just one-time purchases) that can bill through Amazon Payments -- including mobile carriers. Amazon would allow users to manage all of these subscriptions through their Amazon account. That could allow customers to buy app content and pay for cellular service through one payment provider. The e-commerce titan has also been testing a checkout system for physical retailers.

Google Wallet has not gained meaningful traction in mobile payments, and Apple just laid groundwork for a two-pronged strategy. Can Amazon jump in first with payments while getting developers to create content around its new interface? We'll find out next week.

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Evan Niu, CFA owns shares of Apple and has the following options: long January 2015 $65.71 calls on Apple, short January 2015 $68.57 calls on Apple, short January 2015 $60 puts on Facebook, and long January 2015 $35 puts on Facebook. The Motley Fool recommends and owns shares of Amazon.com, Apple, eBay, Facebook, and Google (A and C shares). 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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