Is the Amazon smartphone an act of hubris devoid of any strategic win?

By James Robinson , written on April 15, 2014

From The News Desk

There was smoke and now we see the fire. This morning, photos emerged on BGR of a new Amazon smartphone. The Wall Street Journal had reported on Friday that Amazon would announce it in June and ship by September. This followed an analyst’s report in March that predicted the company would launch a phone within three-to-six months, with an initial assembly run of 300,000-600,000 units.

If the photos are to be believed, Amazon’s phone looks much like any other smartphone. It has a 4.7 inch screen, the same size as the rumored plans for the iPhone 6. Its most innovative element is its 3D interface, with four low-powered infrared cameras tracing the movement of your eye and constantly adjusting the display to alter perspective. It is an old-concept, worked into a new medium. Time called the idea “gimmicky.” We’ll have to wait a few more months to find out its true wow factor.

Taken alongside its recent Fire TV release, Amazon’s smartphone play rounds out the electronics ecosystem begun by the Kindle line.

It grounds Amazon’s feet squarely in the hardware space. But its an area where the company has yet to consistently prove itself. Its Kindle was an iconic success, the company’s iPhone moment, but it was first out into the e-reader market and had the luxury of defining the space. It has held up as a very popular, if not particularly world-beating technology. New splashes like the Kindle Fire, you could call a modest success at best. On Black Friday last year, the Kindle Fire took in just 2.4 percent of the market. The iPad - whose market share it was supposed to eat into directly - took in 88.3 percent. Amazon Fire TV has the set top box hype for now, but it is going to have super-sized competition from Google and Apple before the year is out, alongside Roku, the market leader by some estimates. These new releases find Amazon chasing, not leading, a position where it has had less success.

Amazon doesn’t need to be good at hardware, anyway. Its strengths lie as a consumer retail and media company. The explosion in both the number of mobile devices and the time we spend on them is already a big win for them. As it grows its base as a site for streaming movies and its original content, it doesn’t need exclusive devices to run that through. I own an iPad but am an Amazon Prime Subscriber and have both the generic Amazon and Instant Video apps installed on it. Hulu has grown into a $1 billion a year business remaining device neutral. And anyway, only 23 percent of Netflix and 17 percent of Hulu subscribers stream content on a smartphone. There’s no huge platform gain for Amazon with the phone, as there was with the Kindle. The company is already everywhere on every device.

Jeff Bezos and Amazon’s strategic genius so far has been in entering Amazon into new consumer verticals, lowering its price and waiting out competitors. As a smartphone manufacturer coming up against Apple and Samsung, who between them have over two-thirds of the market sewn up, its strengths are comparatively meeker. Amazon is a giant of commerce, but as a device manufacturer, it is just one of the pack.

Amazon may see something in the market we don’t. Its apparent incorporation of 3D technology suggests that it thinks it can improve the experience. But just maybe, it has made a smartphone because it can. The walled garden it seems to aspire to, creating an Apple-like dominion of devices through which it can sell us things, limits the company. The power of Amazon’s innovation in changing how we shop comes in its pervasiveness.

[illustration by Brad Jonas for Pando]