• by Mark Walsh  @markfwal, June 18, 2014

Amazon on Wednesday unveiled its long-rumored smartphone, providing consumers with another device tailored to buying digital and physical goods from the online retail giant.
 
Dubbed the Fire Phone, the new handset features a 4.7-inch screen and is tightly integrated with other services from Amazon. It also includes image-recognition technology called Firefly, to make it easier to buy items from Amazon.com, and a 3-D capable screen to help set it apart in a crowded smartphone market.
 
The phone, which is black with a rubber frame, will start at $199 with a two-year contract from AT&T. It ships in the U.S. on July 25. As a sweetener, Amazon is also throwing in a $99 Amazon Prime membership for one year for free.
 
In introducing the Fire Phone at a press event in Seattle today, Amazon CEO Jeff Bezos explained that while he had been asked for years about when the company would have a phone, it waited until it had something unique to offer. “It’s patience, persistence and attention to the smallest of details,” he said, referring to building hardware.
 
Amazon launched its Kindle line of e-readers in 2004 and the Kindle Fire Tablet in 2011. Earlier this year, it also brought out its own TV set-top box to compete with Apple TV and Roku. Each is geared to connecting consumers more easily with Amazon’s online store and digital services. Its new offering extends that strategy to the smartphone.
 
"Amazon cares about phones only as a means to a digital relationship end, a way to make sure customers think of Amazon not just a few times a month, or even a few times a week, but dozens of times a day,” said James McQuivey, vice president and principal analyst at Forrester, prior to the expected Fire Phone launch.
 
Still, analysts are skeptical about whether the Fire Phone can gain traction in a mature smartphone market dominated by Apple and Samsung. About three-quarters of U.S. mobile users own smartphones, according to comScore, and Apple and Samsung control nearly 70% of the U.S. market.
 
Amazon has historically undercut competitors by selling quality hardware products like the Kindle at cost. But with the subsidized Fire Phone priced at the same level as other flagship smartphones, Amazon won’t have an edge in that regard. “There’s no disruptive pricing model here,” noted Avi Greengart, research director for consumer platforms and devices, at Current Analysis.
 
But Amazon is clearly trying to attract customers with novel features. The phone’s Firefly button allows users to simply snap a photo of a QR code, barcode, book, DVD or other object to link to back to Amazon’s store to make a purchase. The technology can recognize more than 100 million items and also includes audio recognition of movies and TV shows.
 
The 3-D viewing capability makes images appear to jump off the screen and will work with apps like maps or when shopping on Amazon, according to the company. Amazon had teased the feature, called Dynamic Perspective, in a YouTube video showing a series of awestruck users while keeping the actual device off-screen.
 
The Fire Phone is also designed to work with other Amazon services like Kindle, Prime Video and the newly launched Prime Music, as well as the Mayday button for customer help. Depending on how well the Fire Phone sells, Firefly in particular could make Amazon an even bigger enemy among brick-and-mortar retailers.
 
“It makes it dangerously easy to buy stuff,” said Greengart of the feature. While tablets have proven much more e-commerce friendly than smartphones, he noted that the Fire Phone could enable impulse buys whenever, or wherever, a user saw something they wanted to buy. Even so, he’s not sure that’s enough to power strong sales of the Amazon smartphone.
 
“It’s innovative, technically,” said Greengart. “The question is whether consumers will appreciate that."

To help get pre-orders rolling, Amazon is promoting the Fire Phone front-and-center on its home page, with a signed letter to customers by Bezos.