Amazon Fire phone faces an uphill battle despite the price drop

September 12, 2014
4 min read

Amazon announced on September 8 that it would sell its Fire Phone for 99 cents for consumers who opted for a two-year contract with AT&T. The announcement has been widely regarded as a sign that the device is struggling to gain a foothold in the higher end smartphone market. While the Fire Phone does contain unique features, such as Dynamic Perspective, critics initially wondered whether this would be enough to convince consumers to purchase Amazon over Samsung and Apple. As Mintel’s Mobile Phones – US, February 2014 report showcases, 51% of cell phone owners report owning either a Samsung or Apple device.

The story of the Amazon Fire Phone is starting to look similar to that of the HTC First, which was released in April 2013 and billed on deep integration with Facebook. The HTC First was initially priced at $99, but AT&T dropped its price to 99 cents shortly after its launch, and the phone was widely criticized for lacking in innovation. Another contributing factor was the fact that the HTC First was released around the same time as the Samsung Galaxy S4, which became one of Samsung’s most popular smartphones. Like the HTC First, Amazon designed the Fire Phone to be deeply integrated with its other services and seemed to be designed especially for members of its Amazon Prime program.

Is history repeating itself?

It was clear that Amazon’s smartphone would face a number of challenges when the device first launched to a market largely dominated by other manufacturers. Another challenge for the device is that it is exclusively available with AT&T. The iPhone was also an AT&T exclusive for several years, but Apple faced a very different market than Amazon. Even in 2011 with the release of the iPhone 4S, just 30% of US adults owned smartphones, according to Mintel’s Mobile Phones – US, February 2011. In February 2014, 58% of adults reported owning a smartphone. As a result, Amazon has a smaller opportunity to attract first-time smartphone buyers. The company is also limited in the potential to gain interest from existing smartphone owners, since the device alone will not likely convince a large share of consumers to switch carriers.

Amazon’s device does present one advantage over Facebook’s attempt: The Fire Phone came to the market with more innovation. The Dynamic Perspective feature gives users more options for interacting with the device through enhancing screen tilt functionality and tracking head movements. Early demos of the functionality focused heavily on video games, but it also presented a new way to browse on mobile because users could scroll down a page by tilting the device.

The majority of new mobile devices simply offer more powerful versions of their predecessors without changing much in terms of how users can interact with their smartphones, making Dynamic Perspective one of a handful of innovations that have come to the smartphone market in the last several years.

However, Amazon will continue to face an uphill battle with the Fire Phone, even after the drastically lower price. Although Dynamic Perspective represents a notable innovation, the feature’s value will depend on the number of mobile apps that can use it – without developer interest in Amazon’s device, consumers will be limited in how many apps benefit from the phone’s most significant unique feature. Even so, some variation of Dynamic Perspective or features that mimic its functionality are likely to appear in future mobile devices, even if the Fire Phone fails to capture significant consumer attention.

Bryant Harland brings almost a decade of experience working in the tech arena, most recently as a Senior Technology Writer with Brafton News, where he oversaw the editorial team, wrote as a trade journalist and prepared a range of industry white papers.

Bryant Harland
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