Few markets are as cutthroat and competitive as the international smartphone market, and its two dominant players – Apple and Samsung – are currently engaged in a global battle for dominance of the market. They have filed lawsuits, launched attack-ads and spent millions of dollars in order to create a superior device for the consumer. To make matters more interesting, the market just gained a whole new power house – Amazon; the online retail giant recently made its foray into the market through the release of its new smartphone, the ‘Amazon Fire’.
Jeff Bezos, the enigmatic head of Amazon, has released a smartphone that has competitive specifications and compelling features, and will seek to steal market share from the two current market leaders: Samsung’s Galaxy S5 and Apple’s iPhone 5s. Together, Apple and Samsung control 70% of the US Smartphone market. On paper, the Amazon Fire Phone can compete head-to-head with these phones. The Fire comes equipped with a 4.7-inch screen, which is slightly larger than the iPhone 5, but slightly smaller than the Galaxy S5, as well as 2GB of ram, which is equivalent to that of Samsung’s flagship device. In addition, Amazon’s new device also arrives complete with a 13-megapixel camera and a 2.2 GHz processor. All in all, the Fire offers similar specifications to the S5 and 5S, and is also priced the same, demanding $199 under a two-year contract.
Despite its similarities, Amazon’s new device boasts two unique features, which will serve to both differentiate the phone from its competitors, as well as integrate it into Amazon’s business plan. The first feature is what Amazon calls ‘dynamic perspective’. Essentially, it provides a synthetic 3D visual experience for the user, without the need for 3D glasses. This is done through four cameras located on the front of the phone, which track the position and orientation of the user’s face. Below is a practical demonstration of the technology in action by Bezos himself. This technology has received mixed reviews, but undoubtedly provides a key differentiator when comparing contemporary smartphones.
The second, more impactful feature is an application called Firefly. Firefly’s principal application allows users to contrast the price of an object at a retail location with the same object listed on Amazon, simply by taking a picture of its barcode. But the technology is not limited to simply physical objects; Amazon claims that this technology is capable of recognizing millions of objects, songs, television shows, and even paintings. Firefly, as a stand-alone piece of software, is an interesting concept and neat technology; however, in conjunction with Amazon’s core competencies and business model, it is a disruptive force with the power to drastically affect the retail industry. As it currently stands, retailers such as Best Buy have already felt the pressure from the consumer’s migration to online purchasing, effectively becoming ‘show rooms’ for online retailers; Firefly could accentuate the impact of this trend.
With over 230 million products currently in stock, which is 30 times that of Wal-Mart, Amazon offers more products than any physical retailer possibly can; with a lean distribution and operating system, they are also often able to offer lower prices. Firefly is the final piece to the puzzle, providing consumers with a tool to quickly access Amazon’s network and transparently view its advantages.
An Amazon-powered phone not only provides a missing piece to the company’s business strategy, but also allows the company to cross-sell its current products and gain much-needed leverage against its competitors. The Fire will present cross-selling opportunities through a complimentary subscription to Amazon Prime, normally valued at $100, as well as providing seamless access to Amazon.com and the company’s online book store. In addition, without a hardware product, Amazon has previously been forced to play by Apple and Google’s rules when listing their applications for Apple and Android phones; with their own product, they have an alternative option, and thus have a stronger position to negotiate from for their application offerings.
Amazon’s bold move into competitive territory is also emblematic of an important trend in the market place: the diversification of the world’s largest companies, and their search for additional avenues of growth. In the past year we have seen Facebook attempt to launch its own smartphone, Apple purchase headphone-maker Beats audio and Google purchase ‘smart’ thermostat maker Nest Labs. These moves represent a collective intent held by these large companies to diversify and expand beyond their traditional market space. Tomorrow’s post will dig deeper into this movement, and what it means for business.