Amazon Fire Phone: Too expensive to matter today

At $649, the Amazon Fire Phone appears to be a really good piece of engineering and software design. It’s just too expensive to matter at the moment. This is a turning point to remember though. The ramifications of yesterday’s launch are likely to be seen in 2 or 3 years time.

The current price point will have been a difficult one to decide upon for the Amazon executives famed for their preference for waver-thin margins to wipe the floor with the rest of the market.

When the real Amazon — the one we know from the decimation of other industries — wakes up and decides to compete seriously, that’s when we’ll have a game on our hands in the mobile industry.

As it stands today I’m delighted to see the Fire Phone hit the market. It’s going to give the standard status quo a bit of a kick. Not much. But a bit of a kick. It’s not every day that you see a handset hit the market with a fully formed ecosystem ready and waiting. I could happily pick up the Fire Phone and find oodles of familiarity in terms of my Amazon media. Like millions of others I’m a big user of their Kindle platform and their audiobook service Audible. I have also stuck thousands of music tracks on to Amazon’s Music Cloud — not that I do much with them there… yet. And of course, I am a massive Prime customer.

So the Fire Phone undoubtedly makes a lot of sense.

I certainly agree with the executive comments I published earlier: The Fire Phone is definitely “The Shopping Phone”.

I don’t have a problem with that.

I’m just concerned about price. I’m concerned about the market entry via AT&T in the States. I was secretly hoping for Amazon to absolutely rock the mobile world yesterday by declaring that $649 (or thereabouts) bought the phone AND the data plan for the year. Or something like that. Something to cause  the mobile operator executives opening their FTs this morning to turn very, very pale.

I was reaching with that wish though. The time is not quite right. We’re not quite there. Amazon haven’t bought Truphone. ;-)

That would be an interesting one, wouldn’t it? If Amazon purchased Truphone and then leveraged their global (more or less) data (and calls) footprint to deliver service to almost anyone, anywhere.

I am definitely looking forward to the next step from Amazon. People will buy the Fire Phone. I’ve no doubt. But it’s going to be in small numbers I’m sure, at least in the first instance.

Who is going to want to commit to a 2-year contract and $199 up front for an unproven device? Limited numbers. That will change.

It’s interesting to see AT&T involved again, hoping for a replay of the iPhone exclusive joy they experienced. Times are so different now. When the exclusivity was announced I could feel the frustration from the mobile world in America. Why couldn’t Amazon have chosen a better network if it had to be exclusive? ;-)

Going for exclusivity is a great way of limiting sales — or hiding limited initial sales. A sensible precaution. As long as we don’t have any ‘bumper’ problems hitting the press in the next few months, the pull and the drive of Amazon’s brand should get a few customers walking into AT&T and demanding the device. Likewise the customers wavering over whether to buy a Samsung or an iPhone now have a genuinely strong, familiar brand to choose from.

Let’s just hope we don’t hear about really poor battery performance or similar.

I haven’t bothered ordering one. Yeah it’ll probably sort-of work here in the UK but I have decided to wait for Amazon to fiddle about and launch a UK version. $649 is £380. So I expect the UK version should retail for, what, £399? Still pretty expensive.

I am unconvinced whether the Great Unwashed will respond in droves just yet to queue up virtually for the Fire Phone. The pricing feels too much of a risk at the moment. The early adopters will need to get hold of it and after a few quarters and one or two price reductions, it will be interesting to see how prospective customers react. The Amazon ecosystem is warm and appealing, provided you’re not after a niche set of apps.

Good show Amazon, good show. I’m pretty pleased all round. The price point is the problem — but that can be addressed in time. Once Amazon have a handle on just how valuable the average Fire Phone customer becomes, that should help them make some pricing decisions.

I wonder where we’ll be in 3 years time? Will I eventually be buying my mother a Fire Phone? I can visualise that. Will we all be walking around as “Amazon Prime Data” customers? (i.e. Amazon Prime plus an unlimited data bundle) Here’s hoping. I’d love to see how the operators would respond.

And what of Apple and the others? Bring on the excitement. We’ve need a bit of a change for a long time in the mobile world so I am pleased to welcome the 800lb Gorilla that is Amazon.

Let’s see what comes next from Amazon.

Note: Read the full Amazon Fire Phone press release

 

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  • http://www.i2SMS.com/ Giff Gfroerer, i2SMS

    Ewan, I completely believe Amazon can put a great phone out there. What concerns me is we have entered a time of pretty solid smart phones coming in at the $199 unsubsidized. At $650, that is a huge premium. Next, Apple and Samsung have pretty much defined great user experience, so unseating them will be difficult. To buy an unproven device when you have two other proven providers seems a difficult one. Finally, you usually buy just about every new device that has merit. To me, it is very telling you are waiting on this one… Giff

  • http://www.mobileindustryreview.com Ewan

    How about you Giff… are you an Amazon customer already? Would you consider getting one?

  • http://www.i2SMS.com/ Giff Gfroerer, i2SMS

    I’m 100% in with Amazon. I buy anything and everything I can from them. Free shipping and incredible return policy – nothing is easier for me. I bought the first Kindle Fire on release. I now buy all my music through Amazon. I’m just not so sure I want the phone. I’ve been a TMobile customer for 14 years and very happy with their service and coverage, so would not consider switching carriers just for this phone.

  • http://www.mobileindustryreview.com Ewan

    Ah dear yeah the carrier is yet another problem. You’ve got the cost of the phone and then the requirement to actually use AT&T… some big challenges at the moment.

    Assume it was SIM free. What price would have you hitting the ‘one click to buy’ button?

  • http://www.i2SMS.com/ Giff Gfroerer, i2SMS

    $299? Maybe $399 tops? Too many good alternatives, proven, that are out there right now. I certainly understand they can’t offer what they are for that price. But I may not need the facial recognition they are currently offering and the 3D I understand isn’t really 3D

  • http://www.mobileindustryreview.com Ewan

    I am with you Giff. Around that price point and I think I would jump in with both feet!

  • http://www.mobileindustryreview.com Ewan

    I feel the same way Giff. It’s going to be interesting to see how things proceed in the next few months.

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