This week Amazon.com, Inc. (NASDAQ:AMZN) released its very first smartphone, the Fire. It remains to be seen whether the company will be able to gain a foothold in a market dominated by Apple Inc. (NASDAQ:AAPL) and Samsung Electronics Co., Ltd. (LON:BC94). However, analysts generally think that the Fire might be able to drive even more business to Amazon, which is clearly the purpose of the phone, even more so than sales of the smartphone itself.
The Fire phone goes on sale July 25 only on AT&T Inc. (NYSE:T)’s network.
Amazon incorporates 3D tech
In a report dated June 19, 2014, Benchmark analyst Daniel Kurnos says those who criticize Amazon.com, Inc. (NASDAQ:AMZN)’s 3D technology should think again. He admits that it’s “potentially gimmicky or novelty.” However, he thinks that the online retailer’s technology is truly unique and that it has done a good job integrating the best features of its tablets while also keeping the specs and price in line with other top-of-the-line smartphones.
Amazon.com, Inc. (NASDAQ:AMZN) has incorporated its WhisperSync, X-ray, MayDay customer service button, and Audible. However, the analyst says the Fire phone is truly unique because of its “tie-in technology” called Firefly. He says it’s very similar to the company’s Dash device, although it doesn’t require barcodes because it can scan anything using the 13-megapixel camera and bring up information about it.
The online retailer also made the specs comparable to Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930)’s Galaxy S5, HTC Corp (TPE:2498)’s One M8, and LG’s G3. Amazon.com, Inc. (NASDAQ:AMZN) also set a price that’s equivalent to those handsets, at $199 with a two-year contract for the 32 GB model, although that’s exclusively on AT&T Inc. (NYSE:T)’s network. That price point is even equivalent to Apple Inc. (NASDAQ:AAPL)’s 16 GB iPhone.
Amazon Fire: the phone for shoppers
Those who like to shop online will especially like the smartphone because it makes it extremely easy to shop for anything. Amazon.com, Inc. (NASDAQ:AMZN) stands to gain a lot of revenue because if the products are available on its website, the scan directs shoppers to them on Amazon. Also third-party developers can build right on top of it to enhance the results it brings up.
Kurnos believes that the 3D technology “is a nice add-on” and a “distinguishing feature” of the phone because it will enhance both the gaming and viewing experience. However, he notes that it certainly isn’t a “must-have technology.” He does think Amazon’s Fire phone is aimed at having the best customer experience combined with flexibility for third-party developers.
Other differentiating features of the Fire phone
In another report also dated June 19, 2014, Wedbush analysts Michael Pachter, Nick Citrin and Nick McKay noted a number of other differentiating features in the smartphone. They say that access to Amazon.com, Inc. (NASDAQ:AMZN)’s online content library should help it stand out, as well as free unlimited cloud photo storage.
The Wedbush team thinks it’s essential that Amazon.com, Inc. (NASDAQ:AMZN) offer the Fire phone for sale in carrier stores because it will be easier for salespeople to explain the phone’s features to interested consumers.
Amazon pushes Prime membership
Amazon.com, Inc. (NASDAQ:AMZN) is also including a year of Prime membership free with the phone. Kurnos believes that Prime will drive sales on Amazon’s website and encourage users to sign up for the next year after having it for free because all orders for Prime-eligible products ship for free.
The only negative aspect the analyst sees is the lack of support for Google Inc (NASDAQ:GOOGL) (NASDAQ:GOOG)’s Play or other services. However, Amazon has already made a developer kit available, so he thinks this could change and help build out the Fire phone’s app store. Kurnos has a Buy rating and $500 per share price target on Amazon.com, Inc. (NASDAQ:AMZN).
Amazon to profit in other ways from the Fire phone
The Wedbush team thinks Amazon.com, Inc. (NASDAQ:AMZN) won’t turn a profit on the Fire phone, although they do see it contributing to profits in other ways. In addition to driving Prime membership, they believe it will enable the online retailer to collect more consumer data. They say this will improve Amazon’s product targeting.
They have a Neutral rating and $330 per share price target on Amazon.com, Inc. (NASDAQ:AMZN).
