Amazon's Fire Smartphone Has Ulterior Motives

Amazon just unveiled its new Fire phone. Here's Amazon's real end-game.

Jun 20, 2014 at 8:00AM

It's official: With the release of its new Fire phone on July 25, Amazon.com (NASDAQ:AMZN) will enter the crowded world of smartphones.

The Fire phone will be sold exclusively through AT&T (NYSE:T), and you can pre-order the 32GB version now for $199 with a two-year contract, or $649 without one. On a subsidized basis, that puts it on the same level as the 16GB versions of both Samsung's (NASDAQOTH:SSNLF) Galaxy S5 and Apple's (NASDAQ:AAPL) iPhone 5s. Extra memory notwithstanding, this is a radical departure from the $0 subsidized price tag nearly everyone expected Amazon to introduce.

In addition, there was no talk of a special sponsored data plan through AT&T as many had speculated, so we can't help but wonder why Amazon would tether itself to a single carrier. Then again, it's also not clear exactly how long the Fire phone will remain exclusive to AT&T, so perhaps this is just Amazon's way of testing the waters before it expands distribution.

Amazon stock, Apple stock, AT&T stock, Fire phone

Amazon's Fire Phone sports several unique features, Credit: Amazon.com

In any case, it's obvious that selling millions of low-margin Kindle tablets wasn't enough, and the Fire phone effectively hurls Amazon even further into the battle with Apple and Samsung for consumers' attention through mobile supremacy.

But the move wasn't exactly a huge surprise. Two weeks ago, Amazon teased the Fire phone with invitations to Wednesday's launch event, complete with a video depicting test users' awe struck impressions of the then-unseen device.

So what were they gawking at? Here are a few key features which make Amazon's Fire smartphone so special.

What's Dynamic Perspective?
See those four dots in the Fire phone's corners? They're cameras -- or, to borrow Amazon's words, "ultra-low power specialized cameras." When combined with a dedicated custom processor, sophisticated vision algorithms, a new graphics rendering engine, and four front facing infrared LEDs for nighttime operation, these cameras will usher in a new class of immersive 3-D apps and games.

But instead of 3-D, Amazon's calling it Dynamic Perspective. That's fair enough, as the sensor system also enables a number of one-handed controls enabled by tilting or swiveling the Fire phone, including a slick one-handed auto-scroll feature to let you read long web pages or books without ever touching the screen.

So why all the cameras and infrared sensors instead of your typical accelerometers? In short, Dynamic Perspective doesn't just respond to the phone's movement, but rather tracks your eyes and face to ensure the picture shifts to continuously provide you with an optimal viewing experience.

About those ulterior motives...
But Dynamic Perspective also isn't just for show. So what's Amazon's real end-game here?

In a word: Shopping.

Dynamic Perspective isn't just about games, but has the potential to change online shopping as we know it. To be sure, Amazon simultaneously announced a new Amazon Shopping app for Fire phone, teasing Dynamic Perspective will let you use the app to "peek to see detailed views of clothing, shoes, and more."

Amazon stock, Apple stock, AT&T stock, Fire phone

Amazon Firefly can recognize almost any object. Then, it wants help you buy it. Credit: Amazon

And that's where another feature called "Firefly" comes in. With the touch of a button, the Fire phone can use Firefly to scan and identify printed phone numbers, web and email addresses, QR and bar codes, and -- this is where it gets really interesting -- can recognize over 100 million other items including movies, TV episodes, songs, and products.

Once the item is identified, Firefly enables consumers to take action -- including, calling that printed number, visiting the printed URL without typing the address, or immediately buying said movie, TV show, song, or product right then on Amazon.com.

Even better, for a limited time, Amazon is also throwing in a free year of Prime membership for anyone who buys the Fire phone -- whether or not you're already a Prime subscriber. And why not? With the temptation of free 2-day shipping at your fingertips for millions of items, it'll go a long way toward pushing buyers over the edge.

Foolish takeaway
So how big could this be? SunTrust analyst Robert Peck already weighed in to say this could add as much as $2 billion to Amazon's top line. Now that's a very rough estimate at this point, assuming roughly 2.7 million Fire phones sold primarily to existing Prime members, with each new customer buying around 10 items per year at $50 each.

Whether a significant number of non-Prime members bite on the offer remains to be seen. But even if they don't, selling into it's existing Prime user base should still provide a significant boost to Amazon's top-line, and help it steal even more market share from struggling brick-and-mortar competitors in the retail space. In the end, that's why I think Amazon shareholders have every reason to rejoice over their company's new smartphone ambitions.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Steve Symington owns shares of Apple. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and Apple. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers