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Amazon eyes online sales boost through ‘Fire’ smartphone

amazon has a decent shot at shaking up a market controlled by and Apple as well as selling more of everything to its customers with its new smartphone, unveiled on Wednesday in Seattle.

“Is it a good product and a neat idea? Yup. Will it be a success? Question mark,” says Mohan Sawhney, a management professor at Northwestern University who has studied Amazon.

Another question is just what constitutes success: muscle in on the smartphone market or driving more sales of the multitude of products sold via Amazon.
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The phone is likely to funnel users towards buying more from Amazon, says Michael Graham, an internet analyst at Canaccord Genuity. Getting users of its hardware to buy more goods from its online store is how Amazon profited from the Kindle line of tablet and ereaders, in spite of selling many of those at or below cost.

The phone also comes with a free year of Amazon Prime membership, worth $99, allowing unlimited free shipping and a catalogue of digital music, movies and television shows. Users can store in Amazon’s cloud an unlimited number of photos that they take with the device.

Prime users are more lucrative for Amazon than regular customers, says Mr Graham, and Firefly could encourage phone owners to use Amazon, rather than use search engine Google, as their main place to search for purchases.

But the challenge, says James McQuivey, an analyst with Forrester, is that entry into the phone market is tough to crack. Buying a phone typically means locking into a two-year contract, or paying more for a faster upgrade. The difficulty convincing consumers to wager on whether they will like a new device in two years had stymied many purchases – some early phones from Microsoft sold fewer than 20,000, he says.

Bringing more users into Prime and trying to sell more Amazon goods “are shrewd and calculated moves, and the phone in theory could be a tremendous extension of that strategy, but you’ve got to get people to want one”, he says. “I’m not sure [the Fire] will impress consumers to the tune of millions of them running out to buy it.”

The Fire starts with a 32GB model that sells for $199 on a two-year contract through AT&T, the only US carrier offering the device. Without a contract, it costs $649.

That places the Fire on par with Apple’s iPhone and Samsung’s high-end Galaxy line of devices – a part of the market that is increasingly competitive as sales slow and users are reluctant to switch from familiar brands and operating systems. Many other would-be contenders, including HTC, Motorola and Nokia have struggled to gain market share.
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To help Amazon succeed where others failed, Jeff Bezos, Amazon’s chief executive, brought to the launch in a Seattle warehouse a device that mixes content, customer services and hardware.

Best known for its online shopping mall, Amazon also controls a global network of warehouses, one of the world’s largest commercial cloud storage operations, and has access to a growing catalogue of digital music, movies and films – expanded week with the launch of a Spotify-like music streaming service.

The Fire sports a 3D display that uses four infrared cameras to track users’ head motion and pivot games or maps in line with how the viewer is looking at them. It also has a visual search tool named Firefly.

Having Firefly, a new individual can certainly point the phone’s digital camera in anything from your publication to some shaker involving sodium or a poster as well as possibly get as well as preserve data – such as a contact deal with – or perhaps find the way on to an item web page with Amazon to purchase the idea.

“What many of us saw seemed to be to be able to show several completely new functionality that really hadn’t been completed ahead of within top quality smartphones on the market, ” says Ian Opened, Amazon’s vice-president for your Flame cell phone. “We’ve seen advancement stagnate a tad over the past 2 to 3 many years. ”

Analysts along with Jefferies, the broker, approximate of which Foxconn, the phone’s supplier, can make around two hundred, 000 telephones monthly inside the coming months.

Amazon diminish to inquire into ideas to kick off the unit within Europe, although men and women knowledgeable about the company say it can be keeping chats along with Vodafone as well as O2 in britain with regards to possibly releasing there.

By means of 12 , or perhaps January – following large back to institution as well as getaway product sales – it must be apparent how very well the unit has been doing in america, says Mr McQuivey. In case Amazon lessens the cost or perhaps adds a lot more advantages, such as a different 12 months involving Leading membership rights, it will be a symptom how the first kick off underwhelmed the market and also a re-think seemed to be necessary.

“There are generally levers of which Amazon could still yank in case it to, ” this individual says.

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