Few companies in technology are more feared than e-commerce juggernaut Amazon.com (NASDAQ:AMZN). Amazon is renowned for its preference toward entering disparate technology markets and competing on price to drive out the competition with remarkable success. We've seen this song and dance play out time and again with Amazon's slow march into new areas of technology from cloud services, to e-readers, to tablets, and most recently to step-top TV boxes. Amazon's clearly a company whose ambitions are bound by its imagination. And from the looks of it, Amazon is about to take aim at perhaps one of the few companies that carry as much, if not more, weight in the global technology space: Apple (NASDAQ:AAPL).
Over the weekend, reports surfaced that Amazon is preparing its own smartphone that it will launch later this year, setting the stage for Amazon to challenge Apple's iPhone 6 in what's so far shaping up as a somewhat underwhelming year for smartphone innovation.
The natural question that extends from this new development at least to me becomes can Amazon's coming smartphone challenge Apple's iPhone 6? Or is the year of the iPhone still likely to play out as many seem to be expecting?
Let's have a look.
Amazon's smartphone: What we know right now
According to these reports, Amazon is well under way in demoing its smartphone to developers in San Francisco and Seattle and is hoping to publicly unveil the device no later than June.
In terms of device strategy, Amazon is planning on winning through differentiation, a smart move in a global smartphone market that's certainly crowded. The primary differentiator for Amazon's smartphone will be its screen, into which the company hopes to integrate a display so advanced that it's capable of producing three-dimensional images. This certainly would give Amazon's new smartphone something no other major smartphone vendor can offer, although it remains to be seen whether or not this will appeal to a mass-market user base. This will represent an interesting opportunity to cater to the mobile gaming market, which Amazon has shown a significant interest in of late.
Little else is currently known about Amazon's smartphone plans, and it remains unclear whether Amazon will tap Google's Android mobile OS to power its smartphone on the software side of things. It certainly seems plausible though that Amazon would enlist some kind of forked version of Android OS, as it does with the Kindle Fire line of tablets.
So, can Amazon's smartphone compete with Apple's iPhone 6?
This will undoubtedly be a focus on grand speculation in the media in the months ahead, and just to be transparent, the answer is, of course, maybe.
But in my opinion, Amazon is doing all the right things to challenge Apple's highly anticipated iPhone 6. The key for investors to focus on is the constant game of one-upmanship we've seen play out across development cycles with the major high-end smartphone companies over the last few years.
Apple has proven time and again that in order to get consumers to open their wallets en masse with each new device, you need to offer at least one key feature that no other smartphone offers, such as Siri voice assistance with the iPhone 4s and the fingerprint scanner integrated into the home button in last year's high-end iPhone 5s. Even though it's fair to argue that these products may not have added that much in terms of overall utility themselves, they still helped offer consumers something unavailable anywhere else with remarkable effectiveness.
By focusing on delivering a largely imaging experience, Amazon is showing it understands Apple's lesson loud and clear, and that certainly means it increases the already high odds that Amazon's smartphone could and should be a contender to Apple's iPhone 6 upon its arrival.
Foolish bottom line
This storyline is still only emerging and most reports caution that Amazon could quite possibly alter its plans in the months to come.
An important factor that could determine whether Amazon hits the reported goal of a June product unveil is whether Amazon can produce its advanced screens in sufficient quantity and quality in order to stockpile enough devices prior to the product launch.
But to answer the question originally posed in this article, Amazon can absolutely compete against Apple's iPhone in the months ahead, and that's something tech investors everywhere should be noting today.