The 3-D Phone: Will It Help Amazon and Hurt Apple?

The rumors are flying. E-commerce giant Amazon.com (NASDAQ: AMZN  )  has scheduled an event for June 18, and those in the know claim the company will be announcing the release of a smartphone, but not just any old phone -- one with a 3-D display, too.

Will a phone move the needle for Amazon, and will investors of other smartphone manufacturers like Apple (NASDAQ: AAPL  ) and Samsung (NASDAQOTH: SSNLF  ) be affected?

It's all about content
The 3-D aspect of the phone is probably a gimmick; users wouldn't buy it just for that. Most likely, Amazon wants to use the platform to boost revenue from digital media. To help in that effort, a special data plan is to be created for browsing the company's own content.

Revenue is not a problem in Seattle, as the company has been consistently growing the top line for some time now. The issue, however, is that earnings have not followed suit because Amazon has been reinvesting excess cash back into the business. But, investors have been satisfied with that, and the share price has been climbing. However, the company will probably need to focus on the bottom line at some point. 

AMZN Chart

Source: AMZN data by YCharts

Will a smartphone pay off for Amazon, or will it turn out like the company's relatively unsuccessful foray into tablets?

Market share and shipments of Amazon's Kindle series are declining, and the company ranks well behind leaders Apple and Samsung. The company will have to reverse that trend for a new phone to succeed. 

Shipments in millions
Source: IDC 

Trend is bigger
Growth in the tablet market has slowed recently, and one reason is that smartphones with larger displays, or phablets, such as the Samsung Galaxy Note 3, might be eating into sales of devices like Apple's iPad Mini. So, if Amazon's new phone has a big screen, it may help things. If the device is priced right, it might affect Samsung. 

Apple also recognizes this turn of events and, reportedly, the next version of the iPhone, due out in the fall, will feature a bigger screen alongside other enhancements. Sales of the Galaxy S5, Samsung's latest flagship device, would be affected by an improved iPhone. So, will the iPad Mini eventually disappear?

The next battleground will be on your wrist
Besides smartphones and tablets, the next battleground for these three companies is likely to revolve around smart watches. Samsung already has already released a wearable device, but the Gear hasn't been a good seller and reviews have been generally poor. Apple is rumored to be aggressively working on one, readying it for a fall release. A bigger iPhone and the new "iWatch" would be a formidable combination sure to benefit investors. There has been no news from Amazon on this front, however, but the company would be wise to consider developing a wearable device if wants to compete with the big boys.

Foolish conclusion
Amazon is reportedly going to announce a smartphone soon, and rumors indicate it will feature a 3-D display, which is probably just a gimmick. More important to investors might be screen size -- the bigger the better.

Apple will probably release an iPhone with a beefed up display in the fall. Combined with the long-awaited smart watch, it will surely boost shareholder returns.

Samsung could be pressured on two fronts: on the high end by new iPhone technology, and on the lower end by Amazon's prices. Investors should pay attention to what happens over the next few months. 

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  • Report this Comment On June 13, 2014, at 8:45 AM, VSanity wrote:

    You know, they aren't the first people to make a 3D phone... Not be a longshot. Last time an android device was released with a 3D screen nobody cared. And the previous devices were way better than an amazon dumbed down version

  • Report this Comment On June 13, 2014, at 10:53 AM, twolf2919 wrote:

    @VSanity,

    I don't believe any Android phone had a 3-D screen. Which Android phones are you talking about? We're not talking about a 3-d look on icons - we're talking actual 3D tech. As to whether the AMZN phone will be as dumbed down as its tablets - I guess you can't really know that until the device is introduced.

    For what' it's worth: Apple's iOS 7 "parallax" effect doesn't count as 3-D either - although cool, it's just a display change based on motion - i.e. a head fake.

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