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7/26/2014
08:06 AM
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Amazon's Bruising Week

Second quarter financial struggles combined with poor reviews of the Fire Phone leave Amazon playing defense.

Amazon Fire: 6 Key Points
Amazon Fire: 6 Key Points
(Click image for larger view and slideshow.)

Amazon spent heavily to develop the Fire TV and Fire Phone during the second quarter, and the toll is reflected in the company's financial results. Amazon lost $126 million, despite a 23% jump in revenue.

Worse, Amazon warned investors it will lose much more during the third quarter, projecting a shortfall of about $810 million. Combined with poor reviews of the Fire Phone, the company is suddenly on the defense with investors.

The Fire Phone officially went on sale in the US on Friday. Consumers can buy it from AT&T for $199 with a new contract or $650 at full price. The Fire Phone runs FireOS, a version of Android that substitutes Amazon services for Google's. That means no Gmail, no Google Maps, and no Google Play Store. Instead, Amazon has created its own versions of these and other core apps.

More significantly, the Fire Phone doesn't use the standard Android user interface. Amazon has substituted Google Android entirely with its own version. Rather than presenting apps and widgets on home screens, the Fire Phone uses a rotating carousel and something it calls Dynamic Perspective (camera-based 3D UI). Other features include Firefly, which can be used to search for purchasable products, the Amazon Appstore, and gestures for interacting with the software.

[Amazon placed a risky bet with the Fire Phone. Did it lose? Read Amazon Fire Phone Early Reviews Tepid.]

Various websites published reviews of the Fire Phone ahead of its Friday debut, and the majority of reviewers were unimpressed. Critics derided the phone's UI as gimmicky and its battery life as miserable. In short, the Fire Phone was accused of serving as nothing more than a giant Buy Now button for all things Amazon.

Amazon's hardware strategy has followed a logical path, and the Fire Phone is the ultimate destination for the company's gear-based journey. First it debuted the Kindle for reading books. Then came Kindle Fire tablets for reading books and downloading movies, music, apps, and games. Next on the scene was Fire TV for interacting with Amazon Instant Video.

And now there's a phone to do all these things wherever Amazon customers happen to be. From Amazon's perspective, the Fire Phone makes perfect sense. After all, consumers have shown a penchant for snapping up content from Amazon's tablets. Why shouldn't they do the same from a phone?

Phones are different from tablets. People use smartphones constantly throughout the day, and the devices need to perform basic tasks well. One of those tasks is to run apps. Amazon reports that about 185,000 apps run on the Fire Phone. That's a solid number, but it pales in comparison to the 1+ million apps available to Android devices.

Phones also need to last from morning to night, take good pictures, and make communication with others easy. The Fire Phone doesn't necessarily do all these things -- at least, not well enough.

Amazon's share price angled downward once the negative reviews poured in, but it dropped sharply in trading Friday after Amazon posted its results. The current loss and future shortfall have Amazon investors spooked, for good reason.

Amazon's core business is to sell products via its website. The Kindle, Kindle Fire, Fire TV, and Fire Phone are tools to help the company accomplish that goal. Amazon is competing with the biggest ecosystems on the planet in Apple, Google, and (to a lesser extent) Microsoft, all of which sell devices that can be used to purchase content from their respective content stores. Smartphones and tablets have become a means to an end. For Amazon, the means was expensive to develop, and it won't necessarily lead to the desired end.

Apple, Google, and Microsoft are seasoned veterans and masters at what they do. Amazon is the journeyman looking to attain master status. Amazon has submitted its master work -- the Fire Phone -- for approval. Consumers will vote on the Fire Phone with their wallets.

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Eric is a freelance writer for InformationWeek specializing in mobile technologies. View Full Bio

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melgross
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melgross,
User Rank: Ninja
8/4/2014 | 5:53:36 PM
Re: Gimmicky UI
I read something that makes a lot of sense. The writer states that the buyers of this phone will primarily be Amazon Prime users. They will be getting that year of free Prime use. That brings the price of the phone down by $100. For everyone else, it's not such a great thing, as its purpose is to funnel people into buying from Amazon, with little else of great use. But that also makes any profit debatable.
SaneIT
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SaneIT,
User Rank: Ninja
8/1/2014 | 8:18:28 AM
Re: Gimmicky UI
I didn't catch the product launch so I didn't see the vision as presented by Amazon.  I don't see a lot of positive press about it either which tells me that Amazon isn't out in front of this pushing the marketing the way it will be necessary for the phone to gain traction. 
melgross
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melgross,
User Rank: Ninja
7/31/2014 | 2:37:56 PM
Re: Gimmicky UI
He tried, in that overlong introduction to it. But it isn't all that great, according to every reviewer out there. He seems to have forgotten the negative response to 3D in general, and specifically to the illness reported from many people using them. I've read that while he thinks he's a product guy like Steve Jobs, he's not. That could be a problem.
pcharles09
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pcharles09,
User Rank: Ninja
7/31/2014 | 9:30:32 AM
Re: Gimmicky UI
@SaneIT,

I've heard that many times too. I think the iOS ecosystem has generated the most revenue so developers spend most of their time there. I've also heard that the Android & WP marketplaces are full of tire-kickers so devs don't really anticipate seeing a return on their investments.
SaneIT
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SaneIT,
User Rank: Ninja
7/30/2014 | 7:49:03 AM
Re: Gimmicky UI
@melgross,

If that is what Bezos wants then he needs to be out there telling people why the flashy UI is better.  The most I've seen is a corny demo of their remote help application.  That doesn't make me want to run out and buy one.
SaneIT
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SaneIT,
User Rank: Ninja
7/30/2014 | 7:47:29 AM
Re: Gimmicky UI
@pcharles09,

I've been saying for years that eventually all of the mobile OSes will merge with their desktop counterparts.  Microsoft more or less laid this out as part of their game plan last week.  I suspect Google has the same roadmap with Android and ChromeOS and that Apple will bring iOS and OSX together as well.  This will help with the lack of apps on the mobile platforms but there still needs to be a push to be a desirable place to sell your apps.  I have people tell me all the time that they don't do Android apps because it's not worth the effort.  That confuses me a bit because it's not any tougher for me to get apps to the Play store than it is to get them to iTunes.  Those same people tell me they won't even look at Microsoft because it confuses them with Win8 and Win8phone.  Is it any harder to develop for the Windows platforms?  Probably not, it's just different and many developers don't want to bother with it.

 
pcharles09
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pcharles09,
User Rank: Ninja
7/29/2014 | 10:50:23 PM
Re: Gimmicky UI
@SaneIT,

I agree 100%. I can't tell you how excited I was when WP finally got an Angry Birds app. Unfortunately, it was so late in the game that no one was playing it anymore. That's usally how it goes.

Hopefully Amazon learns from these type of experiences.
melgross
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melgross,
User Rank: Ninja
7/29/2014 | 3:31:38 PM
Re: Gimmicky UI
It does seem as though a flashy UI and advertising as to how advanced the phone is, is what Bezos wants. It's hard to sell another phone is these days. And this doesn't offer much when compared to the majors, and that includes Win Phone.
SaneIT
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SaneIT,
User Rank: Ninja
7/29/2014 | 7:11:20 AM
Re: Gimmicky UI
I agree that being compared to Windows Phone is a bad thing.  I've test driven a few different Windows phones over the past couple of years and have been underwhelmed each time.  It was not because of the UI though, it was the lack of mainstream apps that both Android and iOS have.  I hate to break it to them but it's not the OS that makes the device it's the experience around the device and useful apps are a large part of that experience.  Amazon needs to figure out what they want the user experience to be and sell that feverishly. 
Charlie Babcock
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Charlie Babcock,
User Rank: Author
7/28/2014 | 3:41:50 PM
We're in the Middle Ages of smart phones
"Apple, Google, and Microsoft are seasoned veterans and masters at what they do." This is a brave statement. I would say Apple, Google and Microsoft are the wizened veterans, who sometimes seem to know what they're doing. Microsoft is huffing and puffing, trying to make a Windows phone fly. Google can't seem to enforce sufficient discipline over the Android suppliers to create a unified community. Apple seems to have its act together, as long as no powerful open source alternative appears. We're in the feudal, Middle Ages of smart phones, with, hopefullty, the Enlightenment still to occur.
Page 1 / 3   >   >>
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