Going upmarket on Fire a turning point for Amazon
In regard to Fire, it’s not clear that the image customers have of Amazon and the company’s image of itself are aligned, at least not yet.
Seattle Times technology columnist
Steve Jobs famously had a “reality distortion field” that skewed perceptions of Apple, so people could only see the company in a positive light.
Now Jeff Bezos has “Dynamic Perspective,” a technology on the new Fire phone that lets Amazon.com see what you’re viewing, then alter the image so it seems more compelling.
It better work like a charm if Bezos is going to succeed in a wireless phone market that can savage even the brightest and best-funded newcomers.
Perspective is key.
From my vantage point, it’s not clear that the image customers have of Amazon and the company’s image of itself are aligned, at least not yet.
The company known for offering deals online is now offering a premium phone with AT&T. It’s billed as “being designed by Amazon,” implying the Fire is worth top dollar for the innovation the company brings to the table.
That may be the case, but it’s a test not just of Amazon’s ability to build a phone but also the elasticity of its brand.
Amazon wears more coats than Macklemore but some people still think of it as a bookstore. In reality, media sales are now less than a third of its overall sales and less than a fourth of what it sells in the U.S.
Many see Amazon as an online department store, perhaps as a digital version of Wal-Mart or Costco, but it does much more nowadays.
The company is not viewed as a Netflix, although it’s trying to go there with its streaming-video service. Nor do most people see Amazon as the next FedEx, though it’s on that path with the build out of its global delivery infrastructure.
In tech circles, Amazon stands out for many reasons but mostly because it’s become the leading provider of on-demand, online “cloud” computing services. It has kept ahead, in part, by continually lowering prices of these services, positioning them as a better deal than traditional, on-site computing and competing cloud services.
Each of these views makes sense when you think about the evolution of the online bookstore that Bezos started 20 years ago. It snowballed, expanded and took over more of its shipping, then began renting out extra capacity on its network.
Amazon’s been selling its own line of gadgets for seven years now — starting with the Kindle e-reader — but people see them partly as extensions of the online store. The devices were priced low, reinforcing the perception Amazon is a place to go for deals.
The lure of a bargain makes the commercial aspect of Amazon’s devices more palatable. Yes, they funnel you to Amazon’s store, but it’s a trade-off you make in return for a decent gadget at a good price.
Last week was a turning point, when Amazon decided to position its newest creation as a premium product on par with market leaders, such as the iPhone and Samsung Galaxy handsets.
Bezos should be proud of the Fire. Out of the gate, the company produced what seems to be a pretty nice phone with some interesting features.
The company is so proud, it opted to sell the Fire for top dollar and locked to a single carrier. The phone only runs on AT&T’s network and sells for $649, or $199 with a two-year contract.
With lower-end smartphones seeing the most growth lately and consumers moving away from pricey, restrictive plans, lots of people — including me — expected Amazon to price its phone like a Hyundai and not a BMW.
Asked why Amazon went upmarket, Ian Freed, Amazon vice president of Fire phone, told me it’s worth the price.
“Consumers go to a product that has great value and great innovation, and we think we have plenty of that with Fire phone,’’ he said.
He then listed features such as its Firefly product scanner, free photo storage online and Dynamic Perspective, which creates a 3-D effect.
“There’s just a tremendous amount of value in this product,” he said.
There’s also a swagger in the way Amazon is presenting its phone. Or maybe it’s just being more candid about the confidence it has in the power of its brand and the wisdom of its move into the phone business.
Bezos probably knows best, having analyzed the shopping patterns of tens of millions of people.
But there’s a huge amount of risk for companies that believe their brands and technology are strong enough to crack the handset market.
Hewlett-Packard tried in 2010 with the innovative Palm phones but gave up less than two years later, losing $1.7 billion in the process.
Facebook tried and failed twice with phones designed around its social network.
Then there’s Google, which bought Motorola’s phone business and sold it two years later. Now there’s speculation it will also drop its flagship Nexus phone line and leave the design and production to others.
Bezos is undaunted. He opened the Fire launch event by touting his company’s high ratings for customer satisfaction and brand awareness, and its success with Prime subscriptions and Kindle tablets.
It’s clear that consumers like Amazon. But I’m not sure their view of the company is expansive enough to see it as a designer of premium hardware.
At least not until Bezos fires up the Dynamic Perspective.
Brier Dudley’s column appears Mondays. Reach him at 206-515-5687 or email@example.com
About Brier Dudley
Brier Dudley offers a critical look at technology and business issues affecting the Northwest.
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