Amazon unveils Fire Phone in bid to turn up the heat on Apple and Google

Founder Jeff Bezos pitches Amazon into smartphone scrap with new feature-packed device built for shopping

Amazon entered the smartphone war on Wednesday with the Fire Phone, a feature-packed device built for shopping and aimed at turning up the heat on rivals Apple and Google.

The announcement at a press conference in Seattle came after a lengthy PR tease that involved sending a children’s storybook to reporters and a video of people fawning over an unseen device. "We at Amazon like to do things a little different,” said Amazon founder Jeff Bezos.

The Fire Phone will pitch Amazon into a fight dominated by Apple and Samsung, which dominate the smartphone market. But the company is clearly taking aim at Google, too, as the search giant tries to build its own media and music business through Google Play.

Amazon has struck deals with Netflix, HBO Go and Hulu Plus to stream movies and TV on the device, and Bezos made clear he was courting the millions of people who use its Amazon Prime service to get music and films to encourage them to swap devices.

The new device comes with a 4.7in screen, a 13 megapixel rear camera with an f2.0 lens that Bezos said was better able to take photos in low lighting than its competitors from Apple and Samsung. The phone will come with free, unlimited photo storage via Amazon Cloud Drive. It will also come with what Bezos promised would be “tangle-free” headphones.

Bezos also revealed the device will use its four cameras to show images in “dynamic perspective” – technology that will render maps, pictures of clothing and other images with a 3D perspective. The cameras will also allow the phone to recognize head gestures from users to change the display. The phone is equipped with a Quad-core 2.2GHz processor, Adreno 330 graphics and 2GB of RAM.

Amazon is offering the Fire for $199 with a two-year contract from AT&T, in line with what the carrier charges for the iPhone 5S. UK pricing was not immediately available. The contract will also include 12 months of Amazon Prime, its $99 paid membership service which offers free two-day shipping and access to music, movies and TV shows from the retailer’s streaming video service.

Bezos announced that the phone would run a program called Firefly that recognise items including songs, books, groceries and then enable you to buy them from Amazon. The service will also recognise restaurant signs, wine labels, paintings, linking users to sites giving more information about them.

“Firefly recognizes a hundred million different items in real-world situations," Bezos said.

Bezos spent the early part of the presentation talking about Amazon Prime, its paid-membership service which offers free two-day shipping and access to music, movies and TV shows from the retailer’s streaming video service.

The Amazon boss is clearly hoping he can tempt those Prime customers to switch to Fire in what has become a ferociously competitive and difficult market. Facebook, Google and Microsoft have all faced major setbacks with smartphones.

Facebook released a phone with HTC in April 2013, but the device was a flop. Google’s Android operating system has been a huge success but the search giant's attempts to launch its own phones have been disastrous. Microsoft’s Windows phone operating system accounts for less than 3% of the world smartphone market.

There will be 1.76bn smartphone users worldwide in 2014, according to e Marketer, but just two manufacturers, Apple and Samsung, have managed to make profits.

"An Amazon smartphone would be less about profiting from device sales perse, and more a way to pocket a larger share of multiple revenue streams, such as mobile retail sales, mobile content and advertising," said Cathy Boyle, senior analyst, mobile, at e Marketer.

The smartphone market will be far more difficult for Amazon to dominate than the tablet market or even the ebook sector, where the original Kindle holds sway. The US and UK markets are rapidly approaching saturation point: about 70% of all mobile phone owners in both countries have a smartphone.

Bezos's buyers are likely to be Amazon customers already; it has 244m active customer accounts worldwide, but as half its revenues come from north America, many of those are probably in the US. His prime targets will be people who are also already on AT&T (in the US) or Vodafone (in the UK), and already smartphone owners.

However, Amazon will find it hard to challenge Apple or Samsung, which have the highest customer loyalty among phone brands, and dominate the US and UK. Instead, its best chance of finding converts initially will be owners of weakening Android brands such as HTC, LG or Motorola, which are losing users in the US.


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