The Problem With Amazon.com's Fire Phone

Amazon's new phone has all the high-end specs to possibly justify the price, but not enough smartphone clout to put it on par with the Galaxy S5 and iPhone 5s pricing.

Jun 21, 2014 at 1:00PM

Amazon Fire

Amazon's new Fire phone, priced at $199 with a two-year AT&T contract. Source: Amazon.com.

Earlier this week Amazon.com (NASDAQ:AMZN) launched the Fire phone, it's first foray into the smartphone space. But while many in the tech world have been anticipating an Amazon phone for a while and is heavy on tech features, the phone's price, lack of carriers, and launch timing may prove too much to overcome.

Trial by fire
Apple (NASDAQ:AAPL) and Samsung (NASDAQOTH:SSNLF) are still the undisputed leaders in the high-end smartphone space, and both the iPhone 5s and the Galaxy S5 -- two outstanding devices -- retail for $199 (or less) with a two-year contract with AT&T, Verizon Wireless, or Sprint, or can be purchased without a contract for $649. The Fire phone sells for the same price.

Amazon Fire Phone

Amazon's phone boasts high-end specs, but can it compete with Samsung and Apple? Source: Amazon.

While consumers are used to spending that much money for Apple and Samsung's devices, they aren't exactly used to shelling out premium prices for Amazon's devices.

Some would argue that Amazon's high-tech features like Dynamic Perspective, Firefly, 13 MP camera and 32GB of internal storage make the price very competitive. They may also add the fact that for a limited time customers will get a free Amazon Prime membership with the phone, worth $99.

And they'd be right.

But, let's consider for a moment several things: first, the Galaxy S5 just launched in April and outsold the S4 in first-month sales. Then, add to that Apple will launch an iPhone 6 this fall (and perhaps another phone). So the Fire is coming out on the heels of the most popular smartphone in the world, and right before the second-most popular smartphone in the world is about to launch -- and it's selling that device for the same price. Sorry, Amazon, but good luck with that.

If the timing and pricing weren't enough, the Fire will only be available on AT&T's network. So potential Fire customers, who aren't AT&T's network, have to make the switch in order to get the phone.

Foolish final thoughts
It's hard to bet against Amazon's CEO Jeff Bezos, but I think if investors are expecting the device to be a viable third option in the high-end smartphone market, it may be easier said than done.

Of course, Amazon may not want to take on Apple and Samsung, and could be perfectly happy selling fewer devices and making significant revenue from selling products through the Fire. That's clearly part of the plan with the Firefly feature, but if that was the only scenario Amazon was aiming for, then I think they should have priced the phone just under the iPhone 5s and the S5. As it stands right now, it's in direct competitor to both, and I don't think that's a good place for it to be in.

Something bigger than the Fire phone is coming
Amazon is just entering the smartphone space, a full seven years after Apple. And while the mobile juggernauts will duke it out over phones, the wearable tech movement is starting to build. Are you ready for it? To find one stock that's already firmly in the space, read our new, free report. Just click here now for access.

Chris Neiger has no position in any stocks mentioned. 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