The Problem With's Fire Phone

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

Earlier this week (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'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.

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Chris Neiger

Chris has covered Tech and Telecom companies for The Motley Fool since 2012. Follow him on Twitter for the latest tech stock coverage.

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