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Digitimes Research: Amazon Fire smartphone to promote offline-to-online shopping business model
Luke Lin and Kristina Shih, DIGITIMES Research, Taipei [Thursday 19 June 2014]

Amazon announced its first own-brand smartphone, the Fire on June 18, 2014. Digitimes Research has commented that Amazon has not set the smartphone's price low to boost competition, and the device's hardware specifications are also not considered very high-end. Some special features of the smartphone are Dynamic Perspective and Firefly. Through the combination of Firefly and Amazon's Prime member services, Digitimes Research believes Amazon is trying to change user habits and drive more online shopping.

The strategy is expected to help expand Amazon's e-commerce business and eventually reach a goal that users are able to purchase anything through Amazon's e-commerce platform, but such a move could impact channel retailers, which still rely on physical stores.

The Fire adopts Qualcomm's quad-core Snapdragon 800 processors, a 4.7-inch HD display, 2GB of RAM, and a 13-megapixel rear and 2-megapixel front camera. The smartphone also has four ultra-low power specialized cameras and four infrared LEDs at the front to detect motion and provide information for the Dynamic Perspective function.

Compared to Amazon's previously released Kindle products, which mainly push their entry-level pricing, the Fire smartphone's price after bundling with telecom services, is still at a very similar range to Apple, Samsung and HTC's high-end smartphones, which implies that the Fire smartphone's hardware price-performance ratio is not very strong.

The Dynamic Perspective feature that the Fire smartphone is pushing is expected to bring a visual effect and usage experience that is completely different from before, but for most consumers, the feature is not compelling enough to replace their existing smartphone.

Since Amazon's digital content services are also available on other platforms and other vendors' devices, Digitimes Research said the Fire smartphone will have limited attraction to most existing smartphone users, and will have trouble achieving outstanding sales in the US, a market that has already been highly penetrated by smartphones.

Digitimes Research believes Amazon's release of the Fire smartphone is not meant to compete against other vendors' flagship products in the market, and its initial targets are customer groups that have a high reliance on Amazon's website.

To change consumers' offline shopping habits, the smartphone's free US$99-value one-year Prime membership, free 2-day shipping and Firefly function, which allows users to identify products via the camera, are expected to build up the habit of quickly connecting to Amazon's e-commerce platform with their Fire smartphone to shop online, promoting an offline-to-online business model, and snatching business opportunities away from physical retailers.

Content from this article was part of a complete Digitimes Research Chinese-language report that has not yet been translated into English. If you are interested in an English version of the report or wish to receive more information about the report, click here to contact us and we will get back to you as soon as possible. Digitimes Research also provides quarterly tracking services for market sectors such as Global Tablet, China Smartphone, China Smartphone AP, Taiwan ICT and Taiwan FPD. Click here for more information about Digitimes Research Tracking services.

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