By Mark Bergen
The rumors were true. Amazon, the nation's largest online retailer, will now be selling its own smartphone.
At a highly publicized event in its Seattle headquarters, Amazon CEO Jeff Bezos announced the Fire Phone, doubling down on the brand that the company also uses on its Kindle and TV streaming device.
"Probably the most frequent question I have been asked is, 'Is Amazon going to build a phone?'" Mr. Bezos told the crowd.
"Inside Amazon," he continued, "we asked a different question: 'We asked, how would it be different? Can we build a better phone for our most engaged customers? Can we build a better phone for our Amazon Prime members?
"I'm excited to tell you that the answer is yes," Mr. Bezos said, while holding up the device, a 4.7 inch smartphone.
The event kicked off with video testimonials from Amazon customers touting the e-retailer's earlier devices — its tablets and TV set-box. When Mr. Bezos took the stage, he began by praising the rapid growth of Amazon Prime, the company's paid member service. Standing in front of a chart without numbers, Mr. Bezos described Amazon Prime as recruiting "tens of millions."
Mr. Bezos proceeded to tick off the features of the phone, claiming its camera is superior to those from Apple and Samsung. The phone will also incorporate content from FireTV and Amazon's recently launched Prime music streaming service. "Your library is now a million songs bigger than it was last week," Mr. Bezos said.
The phone also comes with a 3-D-like feature, called "dynamic perspective," that appears to provide depth for the lock screen and maps based on the way users tilt the phone. It also works for shopping.
One of the best weapons the phone may have is in Amazon's massive cloud business: The phone, Mr. Bezos said, will include unlimited photo storage.
And then Mr. Bezos unmasked the biggest new trait.
Firefly is a feature tailored to the Fire Phone, synced with the online retailer's main line of business. Mr. Bezos pointed the phone at various objects: a book, a CD, several board games, a package of Kosher salt, dishwashing detergent and a Nutella jar. The feature recognizes the UPC code and links directly to a sales feature inside Amazon. It also includes a music-recognizing feature, with iHeartRadio, that identifies songs and TV then links to Amazon's store.
Firefly, Mr. Bezos said, recognizes "over a hundred million items."
Some analysts are skeptical that Amazon can compete in the cut-throat smartphone market, where both Facebook and Google experimented and flopped.
A former marketing executive who has worked with large handset-makers said that Amazon is likely to miss that smartphones are a "status symbol" that require "lifestyle branding to succeed."
"Apple knew this from the beginning and Samsung learned it," the former executive said. "All others continue to think it's about building a better phone with some flash-in-the-pan feature that no one ultimately cares about."
Still, given the introduction of Firefly, it's clear Fire Phone is about much more than just selling phones.
"An Amazon smartphone would be less about profiting from device sales per se and more a way to pocket a larger share of multiple revenue streams, such as mobile retail sales, mobile content and advertising," Cathy Boyle, senior mobile at eMarketer, said in a statement.
It's not yet clear how Amazon plans to market Fire Phone. But, historically, the retailer has given its hardware devices plenty of support. From 2008 to 2012, its ad spending more than quadrupled as the online retailer moved to market its hardware devices — the Kindle e-reader and Kindle Fire tablet — and its Amazon Prime paid membership service. Last year, the company reported $3.05 billion in marketing and promotional spending.
Thus far, Amazon has not held deep relationships with ad agencies. It has worked with MEC Global and Denuo, a Publicis Groupe company. Much of Amazon's marketing work is produced internally, according to agency executives.