Apple's (AAPL 0.43%) iPhone business is incredibly important to investors. Not only is it the tech giant's most profitable segment, but it also accounts for a whopping 57% of Apple's total revenue. Anything that has an impact on Apple's iPhone business will ultimately have an impact on the intrinsic value of the business. This is why investors will be watching closely tomorrow when Amazon (AMZN -0.06%) unveils its new device, which is predicted to be a smartphone. Can the e-commerce king compete with Apple?

This is the only official image available of the alleged device Amazon will launch tomorrow. Image source: Amazon.

What do we know about the device?
First, there are the presumptions. Amazon likes to build its consumer electronics products around a shopping experience. That's exactly what the company did with its Kindle and Kindle Fire line of e-readers and tablets. Perhaps CEO Jeff Bezos plans to take these efforts to a whole new level tomorrow with the launch of an Amazon-branded smartphone. However Bezos manages to make it happen, the central goal of the phone will almost undoubtedly be to get more customers actively using its Prime membership for their shopping needs.

And investors are intimately familiar with Amazon's approach to pricing. Bezos has said on multiple occasions that he sells hardware at a loss or at cost, making money from the improved Amazon shopping relationships with customers. The phone, therefore, will likely be cheap -- perhaps wildly cheap. But in an industry where phones are already heavily subsidized by carriers, competing on price won't be easy.

Then, there is the little we know: The phone has some sort of intriguing and entertaining display technology -- perhaps some sort of 3D hologram? This inference can be made from watching the one teaser video Amazon has provided.

For a limited time, Amazon was taking requests from individuals who wished to receive invitations to the event. The company was even accepting requests from customers. But Amazon now says it has stopped taking requests due to "an overwhelming response."

Competition or not?
Competing with Apple and other dominant players in the smartphone and mobile OS space, like Samsung and Google, won't be easy. Given the expansive reach of the iOS and the Android ecosystem, particularly when it comes to Apple's App Store and Google's Google Play, any new content and operating system offerings (or lack thereof) that come with the device may be what will make or break its success.

Sure, both low price and whatever intriguing display technology Amazon has built into the phone will likely help build a value proposition for the device. But Amazon will need to sell tens of millions of phones annually to hinder iPhone sales enough to concern Apple investors. In the last 12 months, Apple sold about 160 million iPhones.

The Amazon event will kick off at 1:30 PM EST tomorrow.