- Amazon has announced the launch of the highly anticipated 3-D ‘Fire’ smartphone.
- The device is comparable to other leading smartphones in terms of features as well as pricing. We think competitive pricing is a good move rather than creating a loss leader.
- The Firefly option is a feature of tremendous potential to drive topline growth at Amazon.
The much awaited and highly anticipated 3-D fire phone from Amazon (NASDAQ:AMZN) was finally revealed yesterday, at an event in Seattle. The phone has lit up various tech forums with discussions on the specifications and new technologies revealed by the e-retailer in its first smartphone launch. Here is what we think of the 3-D Fire phone and what it means to the amazon ecosystem.
Fire 3-D: A Powerful Package
Amazon’s fire phone is currently available for pre-booking on amazon.com, with deliveries scheduled to start on July 25th. However, the phone is currently only available to US customers through AT&T’s network. Amazon has packed a really solid hardware and software mix under the 4.7 inch display boasting of features comparable with other high end smartphones out in the market. Let’s take a look at the specifications in comparison to Samsung Galaxy S5 and Apple’s iPhone.
Image courtesy: Dailymail
While most of the features were comparable, if not better, than most top end smartphones a couple of features stood out. The most noteworthy of features include the much talked about dynamic perspective, a feature which enables users to control the phone with one handed motions like tilt, swivel or peeks. The feature enables users get a 3-D experience and view on the screen without the need to wear 3-D glasses. However, the 3-D screen was a feature which was expected following various rumors surrounding the phone. Amazon has now posted an official video of the 3-D screen which has many beta users in awe of what they see.
Firefly: Potential To Drive Amazon Topline
While the 3-D screen has amazed a number of beta users, a feature which stood out was the Firefly button. This is something which was a complete surprise and remains a well-kept secret of Amazon. The Firefly button brings amazon.com’s vast e-commerce store in closer proximity to the end user. And how exactly is Amazon doing that?
The Firefly feature incorporates a technology which can recognize:
- Printed phone numbers, email, web addresses, QR, and bar codes enabling a user make calls, send emails and visit websites all without the need to touch the screen.
- 245,000 movies and TV episodes, and 160 live TV channels and provide details on the cast, IMDb information and related content in real time.
- 35 million songs to provide information and similar music content to a user from Amazon music’s content library.
- 70 million products, including household items, books, DVDs, CDs, video games, and more providing users an immediate ability to purchase the items or add them to your wish list on amazon.com.
The firefly option comes with a single point aim: to drive content sales by making it easier for customers to access amazon’s vast digital and physical content. This is precisely the reason we view the Firefly feature and eagerly look forward to the market response to Amazon Fire. Couple this with Amazon’s Mayday support service, and Amazon Fire-phone could drive topline growth to higher levels.
In conclusion, Amazon Fire phone is a device capable of standing its ground on technical comparisons with the very best devices out there. Moreover, the phone has been attractively priced from $199 for a two year contract price to $649 for a no-contract device, which is line with other flagship phones like Apple’s iPhone. These are prices which will definitely price in a significant profit margin as Apple is known for its premium margins. Hence the break-even point for the Fire phone could be well below the 7 million units of the Amazon smartphone. Avoiding a cost strategy will do more good to Amazon’s bottom line and could be an indicator of Amazon’s shift to a bottom line focused strategy. The key takeaway for investors will be the ease of shopping from amazon.com which will facilitated by the Firefly option. This could drive additional content sales for Amazon, which has been the constant dream of Jeff Bezos.
However, from an investor’s point of view, Amazon still represents a high risk investment option given its premium valuation multiples with a price-to-earnings multiple of 530 and a price-to-sales multiple of 1.97. Watch our Amazon stock analysis to see why we continue to reiterate our negative long term look on Amazon stock.
To see Amazon’s latest stock price movement, click on Amazon stock chart.