Earlier this week, Amazon.com (NASDAQ:AMZN) officially entered the smartphone market with Fire Phone. The e-commerce giant has spent four years developing the device. Amazon calls the 3-D interface Dynamic Perspective, and it is one of the more prominent differentiating features. But can it challenge Apple (NASDAQ:AAPL) and Samsung?

The hardware specs are mostly midrange, featuring a previous-generation Qualcomm processor and 720p display. AT&T will be the exclusive carrier in the U.S., in line with prior reports. However, the device is priced at the high end of the market, which is out of place considering the specs and Amazon's usual pricing strategy. Apple and Samsung own the high end, and Amazon's offering won't be competitive at the unsubsidized price point of $650.

One pleasant surprise is that the company is offering 12 months of Prime for free to Fire buyers. Fire Phone includes an innovative Firefly feature, which allows users to point the device at almost any physical object and order it directly on Amazon. Even if Fire Phone doesn't become a game changer in unit volumes, it can still help Amazon grow its Prime business and likely become operating-income positive.

In this segment of Tech Teardown, Erin Kennedy discusses Fire Phone with Evan Niu, CFA.

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Erin Kennedy owns shares of Apple. Evan Niu, CFA, owns shares of Apple and Qualcomm and has the following options: short January 2015 $280 puts on Amazon.com and long January 2015 $250 puts on Amazon.com. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com, Apple, and Qualcomm. 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.