With its launch of the premium-priced Fire Phone on Wednesday, Amazon (NASDAQ:AMZN) showed it wants in on some of Apple's (NASDAQ:AAPL) massive profit margins. But even after the phone's debut, it still isn't quite clear whether Amazon can even earn of sliver of the profits Apple's iPhone line boasts.
Summarizing the 4.7-inch smartphone's features, Motley Fool senior technology specialist Evan Niu concluded the key selling points Amazon is targeting with the phone are a Prime promotion (a free year of membership with the purchase of the device), its Dynamic Perspective interface, and a simplified Amazon.com shopping experience.
But is this value proposition compelling enough to convince consumers to pay up a price on par with Apple's flagship phone?
Destined to become a novelty?
While the Prime promotion and the Firefly button (which enables an easier Amazon shopping experience) could turn out to be decent selling points for hard-core Amazon users, Dynamic Perspective's usefulness as a selling point is less certain. Yes, the gimmicky differentiator is a bold move. But will it help sell the device?
What is Dynamic perspective? Tapping into its five front-facing cameras, the phone triangulates a user's face to track head movements in order to create a 3-D-like experience as the user's face moves in relation to the display.
While the feature appears neat, it could very well become a feature the smartphone market shrugs off and moves past.
If the phone was priced at an Amazon-like aggressive $400, the gimmick could be more compelling. But, in light of its $649 price tag, the technology will probably play absolutely zero role in convincing Samsung Galaxy and iPhone users to make a switch to the device.
Sure, there are other solid features. The 13-megapixel rear-facing camera and the Firefly button that uses advanced computer vision to rapidly identify items and pull them on Amazon.com, for instance. But there isn't anything about the phone that screams, "buy me!" when it is compared to similarly priced smartphones.
For Amazon, a small win?
Maybe the Fire Phone won't be a blockbuster hit. But the phone's deep integration with Amazon Prime could at least make it a small win for the company.
Unfortunately, Amazon hasn't been very vocal on the value of Prime members, but Chief Executive Officer Jeff Bezos has made it very clear that Prime member's are the key to Amazon's success, and among the company's best growth opportunities. If the phone serves as an excellent evangelist in helping its prime membership grow faster and stronger, that may be all Amazon needs to consider the phone a success. After all, it was very clear at the launch event that Prime was a key focus; Bezos spent a good chunk of the beginning of the presentation talking about the importance of Prime members.
Though we can't put any numbers on sales yet (and probably never will considering Amazon's historical secrecy about hardware sales), we do know the Fire Phone is already among the best selling devices on Amazon.com. At the time of this writing, it's the fourth best-selling item in Electronics on the site.
But can the Fire Phone shift the storyline for Apple or Samsung? Probably not.
For Amazon, the Fire Phone has the potential to be a game-changer. But for the broader smartphone market, particularly Samsung and Apple who already make comparably priced smartphones, the phone is not a game-changer.