"Yeah, absolutely. I mean, that's the kind of thing where you would ask, 'What is the idea? How would it be differentiated? Why wouldn't it be, 'me, too?''"
-- Jeff Bezos on whether a possible phone makes sense, January 2013
This day has literally been years in the making. Rumors that Amazon.com (NASDAQ:AMZN) was building a smartphone have circulated for ages, and the mythical device has finally now materialized in the form of the Fire Phone. Apple effectively jump-started the modern smartphone market in 2007. Seven years later, Amazon wants in on the action.
Prime numbers, or lack thereof
CEO Jeff Bezos kicked off the event by touting Prime and its remarkable growth over the past few years. Between 2005 and 2010, Prime member growth was largely linear. Things took off in 2011, and growth has been exponential in recent years. Bezos displayed a hockey-stick chart of cumulative members -- conveniently lacking scale.
As usual, the extent of detail that Amazon provides on its Prime membership base is that it is in the "tens of millions." Investors already knew that Amazon's phone would have close ties to Prime, so starting the discussion here wasn't entirely unexpected. Bezos did use an oddly tortured bucket metaphor to describe Prime's high retention rates, which are again a mystery to mere mortals (i.e., public investors).
Let's talk hardware
The Fire Phone will feature a 4.7-inch display, a 13-megapixel rear-facing camera with optical image stabilization, and a Qualcomm Snapdragon 800 processor. That's a somewhat older processor, originally released in early 2013, which could suggest that the Fire Phone is a mid-range device. There is also a 2.1-megapixel front-facing camera along with four other front-facing cameras, but more on those later.
Amazon is including headphones that it calls tangle-free. There are dual front-facing stereo speakers, and the device supports nine different LTE bands. Other usual suspects include 802.11ac Wi-Fi, NFC, and Bluetooth.
Let's talk software
The biggest differentiator of the Fire Phone is the 3-D interface that Amazon is calling Dynamic Perspective. That's one important way Amazon hopes the device won't simply become another "me, too" offering. The four extra aforementioned cameras are used to track head movements, and the interface changes in response.
The device needs only two cameras at any given time to determine the X, Y, and Z coordinates of your head, and it picks the two cameras that have the best view. Plus, the user's hands may sometimes block a camera or two. Amazon is offering a Dynamic Perspective SDK so that third-party developers can create apps and games using the new interface and sensors, which is why it was asking such loaded questions.
Let's talk services
MayDay, the live customer support service that made its debut on the Kindle Fire HDX last year, is making a return. The service is available 24 hours a day, seven days a week, 365 days a year. Users can access it via Wi-Fi or over cellular connections.
More interesting was Firefly, a new service that can recognize text, movies, music, and physical products through the phone's camera. It can then provide contextual information on that content using Amazon's X-Ray service, but in the case of physical products the phone will -- you guessed it -- allow you to immediately buy said product on Amazon. Developers will also have access to a Firefly SDK.
It was always inevitable that this phone would be but a facet of Amazon's broader Prime strategy. As such, Amazon is including 12 months of Prime membership for free for a limited time. That offer is good for new and existing members. AT&T (NYSE:T) will be the exclusive carrier, in line with reports earlier this week, and offer the Fire Phone for $200 on contract for a 32 GB model. Bumping that up to 64 GB will cost an extra $100.
However, the real question will be whether the Prime promotion, Dynamic Perspective interface, and simplified shopping experience can truly set the Fire Phone apart in an increasingly competitive smartphone market.
Evan Niu, CFA, owns shares of Apple and Qualcomm and has options on Amazon.com. The Motley Fool recommends Amazon.com and Apple and owns shares of Amazon.com, Apple, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.