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Re: Forget the innovative technology - why would anyone buy a phone from Amazon?
junko.yoshida   6/19/2014 1:26:35 PM
DMcCunney, you wrote:

The fact that the Fire lacks access to the Google Play store implies the Fire phone runs a flavor of Android.

Exactly. This is based on Fire OS, which is a variation of the Android OS produced by Amazon. We do look forward to the teardown of this, of course.

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Re: No access to Play store
tb100   6/19/2014 1:07:39 PM
"Fire Phone not having the Google Play store is also a big negative"

Well, I disagree with this. What does Google Play offer? Android apps. What does the Amazon app store offer? Android apps...usually the same apps. Why wouldn't the app author put his app in both stores? 

Well, here's one reason:

Unlinke Apple, Google has almost no rules about what it puts in its app store. As a result, there are perhaps millions of copy-cat apps and lots of garbage and even malware infected apps. 

Amazon takes a middle ground, and tests all submitted apps before putting them in its app store. As a result, there's a lot less garbage and malware in Amazon's store. So why not just use the Amazon app store on a Google-Android device? You can do this. The problem is that you have to enable third party downloads to get this to work, which decreases the security of the phone and opens it to accidental downloads of malware (such as if you accidentally click on a 'download me' link on a web page).

So an Amazon phone is likely to be less susceptible to malware than an Android Google phone precisely because it doesn't have the Google Play store. 

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Forget the innovative technology - why would anyone buy a phone from Amazon?
DMcCunney   6/19/2014 12:08:27 PM
I see this new offering in line with the things like the Kindle eBook viewer, and the Kindle Fire tablet. 

The original Kindle eBook viewer was a loss leader, sold below cost.  Amazon wasn't trying to make money on the hardware: they were trying to build a market for eBooks they could sell you.  eBooks were a natural for Amazon, as they already had the infrastructure to display the catalog and accept the order.  With eBooks, they could offer immediate fulfillment in the form of a digital download, with none of the warehousing or shipping costs of physical goods.  It was no surprise at all to me when Kindle apps appeared for a variety of platforms.  Amazon wanted to sell you eBooks, and the more things you could order them from and read them on, the better.  The entire Amazon approach was designed around locking you into them as the vendor.

The Kindle Fire tablet was more of the same.  eBooks aren't the only things in digital format, and the Fire offers the ability to view pictures and video and play audio as well as read eBooks.  It's not a surprise either that Amazon has video and music production arms making content you can only get through Amazon.

Amazon is the world's largest catalog retailer, walking the path blazed by people like Sears Roebuck, but dropping the brick and mortar outlets and moving the catalog online.  Retail is about market share, and the financial measuring sticks are inventory turnover and return on assets, not profitability.  Most retailers, Amazon included, sell fungible commodities where competition is on price, and have razor thin margins as a consequence.  They make pennies on a dollar, so they need to take in as many dollars as possible to make pennies on.  It also leads to inevitable consolodation as retailers combine to get market share and economies of scale.

That Amazon should release a phone with technology that will let you take a picture and figure out what it's a picture of and buy it from Amazon is interesting, but it begs an important question.  The technology is embedded in a phone.  What should anyone buy a phone from Amazon?

The question is complicated by the nature of the US phone market.  Most folks buy phones with carrier subsidies, and get a substantial discount on the list price in exchange for commiting to a multi-year contract.  The carrier pays the manufacturer the difference between list price and what the buyer pays, and expects to cover the costs and make money on the revenue generated during the life of the contract.  (I saw fairly convincing arguements that AT&T was losing money on the iPhone, because of the size of the subsidy payments going to Apple, and made money only if the customer renewed the contract.)

Amazon's offering will succeed or fail based on how it does as a phone.  And the nature of the new technology pretty much requires an always on phone with high bandwidth and a substantial (and expensive) data plan.  What will a data plan necessary to make use of the shiny new features cost?  What will total cost of ownership be?

The fact that the Fire lacks access to the Google Play store inplies the Fire phone runs a flavor of Android.  It will be curious to see a teardown on the hardware to see how much of what the software does relies on proprietary hardware (My guess is, not much), and what version of Android is under the hood.  And since Android is open source, it will be interesting to see how long it takes before Android releases the source for the Android image they use, and how long is takes before hacks appear.

I really don't see Amazon trying to make money on smartphone hardware.  I see this as a test bed to introduce technology I expect to see rolled out as apps for platforms with hardware to make use of them, and the entire underlying purpose is to drive retail traffic to Amazon.

I wouldn't buy one, or accept one free.

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The Target User
HankWalker   6/19/2014 12:03:43 PM
I think the target user is the same as a Kindle Fire tablet user. My wife used a Kindle, then got a Kindle Fire when the Kindle died, and mostly uses it to read books, watch movies/TV shows, and play games. I discovered that my daughter mostly uses her Netflix subscription on her phone, not her computer. So I could see users who will do phone basics (call, text, email, surf), listen to music, watch movies/TV shows, and read books, and who will be satisfied if key apps are there.

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It's not a phone, it's an input device for Amazon's AI system.
alex128   6/19/2014 11:45:29 AM
This is not just another new phone for consumers, it is potentially a huge revenue/patent generator for Amazon if it becomes popular enough.

By scanning and uploading, users voluntarily provide invaluable information such as location, time, ambience, etc. that can be a huge in-the-field training set to Amazon's AI system, even if the users remain anonymous.

The outcome of the AI system could be sold to all sorts of companies for targeted advertising, as an example.

By controlling the physical device down to the bottom, Amazon has a free pass to upload whatever they want to their AI system in the "cloud".

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Re: No access to Play store
junko.yoshida   6/19/2014 11:01:18 AM
Hi, Pablo. Indeed. I like Amazon, too. I have little to complain about their delivery and customer services. What really got to me, though, in looking at yesterday's announcement was that this wasn't about a smartphone at all. This is about a portable shopping scanner that works for Amazon.

Pablo Valerio
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No access to Play store
Pablo Valerio   6/19/2014 10:25:15 AM
"Fire Phone not having the Google Play store is also a big negative"

Junko, I agree with you. And the phone is not cheap.

I like Amazon, I usually praise their business strategy. But I am not interested in their hardware, except the basic Kindle (great to borrow ebooks from the library)

There are many other phones, much cheaper, that can compete with Fire. Unless you are a shopaholic I don't see any advantage of having access to a 100 million items database.

I believe the Fire phone could be popular among people who are heavy Amazon customers and have the Premium service.

It is not cheap, based on the subsidized price ($250 with a two-year contract) it is on the same league of the iPhone 5S and the Galaxy S5. If you want a cheap Android smartphone with similar features look for the Nokia ones or the OnePlus One

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