The Fire Phone won't be a meaningful catalyst for Amazon.com (NASDAQ: AMZN ) stock until it gets better at enabling commerce.
I'll understand if that sounds crazy. The onboard Firefly database allows users to point Fire Phone at one of more than 70 million household products in order to make it easier to buy at Amazon.com. What could possibly be missing? One thing: mobile payments.
What Amazon really wants
For a glimpse at how this might look, I pulled this little-viewed YouTube video from Amazon's own payments team:
Notice that it isn't the user but the retailer that controls the payments infrastructure. If you're a small business and you want to offer customers the option of paying through Amazon, you can do so by including a button that activates a hosted checkout system. Neat, but not necessarily distinct when Square and PayPal already offer their own mobile payments systems.
Indeed, PayPal processed more than $27 billion in mobile transactions last year while growing overall revenue 20%. Square, meanwhile, has taken the extra step of using the data on its small-business customers to begin offering simplified loans. Competition is getting fiercer by the day.
The missing link
Contrast that with the consumer side of the market. Despite persistent rumors that Apple (NASDAQ: AAPL ) would encourage its 800-plus million iTunes users to try a new payments system tied to the iPhone, we've yet to see consumers adopt any single "digital wallet" app on a mass scale. Firefly could be that app, and not just for the Fire Phone.
Think about it. You point your iOS or Android smartphone at an item you're interested in and the Firefly app gets more details or even comparison shops for you. Then, at checkout, you pay with your phone and Amazon account, giving the e-tailer a cut of the proceeds.
Of course, you couldn't do this without smart, wireless point-of-sale terminals. But that's also a temporary roadblock. Mobile point of sale systems comprise a roughly $2 billion market in North America right now. Users will do more with digital wallets as these systems become pervasive. The only question for investors is how much will Amazon participate.
The Fire Phone may already be too late
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!