BackAmazon CEO Jeff Bezos unveils Fire Phone smartphone
Device to compete against Apple and Samsung; AT&T will be the exclusive carrier of the smartphone
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San Francisco: Amazon.com Inc. jumped into the crowded smartphone market with its own handset called Fire Phone, ramping up competition with Apple Inc. and Samsung Electronics Co.
Amazon chief executive officer Jeff Bezos showed the device at an event in Seattle on Wednesday. Fire Phone is black with a rubber frame and 4.7-inch display. “You have to be patient, you have to work at it and you have to obsess about the smallest of details," Bezos said at the event, referring to Amazon’s approach to hardware.
The introduction continues Amazon’s evolution from online book seller to global technology titan with its hands in a growing number of businesses. The world’s largest online retailer has debuted a variety of consumer electronics devices, including e-readers, tablets and TV set-top boxes, as a way to get its online store and digital services more directly in front of customers.
AT&T Inc., the second-biggest US mobile phone operator, will be the exclusive carrier for the new smartphone, a person familiar with the matter said on Tuesday. The arrangement is reminiscent of AT&T’s 2007 deal to be the sole carrier of Apple’s iPhone, which boosted the carrier. Verizon Communications Inc. later started selling the iPhone in 2011.
Consumer Route
The smartphone gives Amazon a way to feature its online store and digital services for games, mobile applications, movies and music on the computing device people take with them wherever they go. Instead of having its app among the hundreds of thousands available through Apple’s App Store or Google Inc.’s Play store, Amazon’s services are the centerpiece of the new device.
While Amazon has used this strategy with its Kindle Fire tablet and Fire TV set-top box, the smartphone market is a much larger opportunity. According to researcher IDC, the number of smartphone users worldwide is quickly approaching two billion. Yet the handset industry is an increasingly complicated market to navigate. The devices generated sales of $338.2 billion last year, up 21% from 2012, according to IDC.
Much of the growth has been coming from developing countries like China, where local manufacturers like Lenovo Group Ltd. and Xiaomi Corp. are gaining popularity. In the US, where Apple and Samsung are the biggest players, growth is slowing.
Apple is anticipated to release iPhone models with bigger screens later this year.
Slim Margins
Amazon has shown a willingness to trade near-term profits if it can lure new customers. Of its $19.7 billion in sales last quarter, the company generated $108 million in net income, or less than 1 cent of profit for every dollar of revenue.
Beyond consumer electronics, Bezos is spending to expand in the grocery business and building data centres filled with servers that are rented by a growing number of companies. The company’s small profit margins have been under scrutiny from investors, who have pushed the web retailer’s stock down more than 18% this year.
Companies willing to spend heavily aren’t assured success in the smartphone market. Apple and Samsung are the only companies profiting in the global smartphone market, according to Canaccord Genuity Equity Research.
Amazon’s smartphone introduction comes as other parts of its business face scrutiny. The company is embroiled in contract negotiations with media companies including Hachette Book Group and Warner Bros. over the cut of sales of certain products, resulting in limited inventory of some titles. The US labour department also has investigated deaths at the warehouses where Amazon’s products are stored and distributed.
“The most important thing that we’ve done over the last 20 years is earn trust with customers," Bezos said at the event. “We’ve worked hard to do that."
Earlier on Wednesday, BlackBerry Ltd. also said its smartphone customers will gain access to Amazon’s app store, which has many programs that BlackBerry users can’t currently download. The move goes into effect this fall when the Canadian smartphone maker releases its BlackBerry 10.3 operating system. Bloomberg
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