My question remains - why did Amazon go for the high-end price point? Amazon has excelled previously by competing on price. While the Fire Phone is competitively priced to the corresponding iPhone or Galaxy (esp. given the freebies), it simply doesn't make up for the lack of Google Play or iOS AppStore. And chained to AT&T?
Perhaps this is Amazon's stalking horse into the phone market.
From afar it seems like the US market can't handle phones that cost less than $600, so pricing at less than that has basically no effect on what the average consumer pays.
In the US most people[1,2] get their phones on contract, and a $600 subsidy is standard. If you plan to mostly forgo the prepaid market then US customers are cost insensitive, and pricing a phone at less than $600 is giving money away to the carriers. Similarly if a customer plans to stick with Verizon, Sprint or AT&T then they are throwing away money if they don't use the "free" upgrade on an expensive phone every chance they get.
My father-in-law recently realized that he had paid Verizon about $1200 extra for his Samsung Alias 2, and promptly switched carriers to one where you start saving money after 2 years.
Getting us to call these usurious loans "subsidies" is probably the most ingenious bit of underhanded marketing the cell carriers ever concocted.
I think you should generally be suspicious when a vendor tries to get you, the customer, to use the vendor's own internal jargon. As a customer, I shouldn't need to know your jargon; I don't give a shit about your internal policies and terms. If you're encouraging me to speak your unnatural language, you're probably trying to give me a false sense of security and savvy that makes it easier to pick my pocket.
One sees similar moves in many complicated transactions like real estate, automobile leases and purchases, etc.
Beyond the correct analysis of marketing-speak the market looks like contract phones are basically a "worse than payday loan" interest rate of a couple hundred bucks and couple year payback period. So you get a $500 phone at a cost of maybe $2000 over the course of the loan. The MVNO resellers mostly seem to go prepay, I know I paid $300 for my phone some time ago, but I only pay $22 per month for voice and psuedo-unlimited data so I'm pretty happy.
It is interesting that Amazon is kinda in between, kinda a subprime loan seller and kinda a phone service reseller, probably for financial reasons.
Amazon does seem to be financializing itself, they do push their credit card every time I buy. It is no great modification to drift sideways into phone loans.
In the long run I expect to see them continue to financialize themselves into perhaps subprime car loans (outright buy Car Max or a competitor?) and eventually home equity loans (to buy more stuff at Amazon) or home loans (complete with prime membership to help fill your house with trinkets from china)
So it makes sense as a grand strategy thing to move away from Amazon the book retailer and into Amazon the bank. Nobody in America can make a living doing anything but FIRE sector in the long run by intentional regulation, so they kinda have to do this.
What carrier is your $22 pseudo-unlimited data though? I'm looking at some alternatives and T-Mobile's $30 unlimited seems like a decent bet. But $22 for pseudo-unlimited would still be a step up from AT&T's 300 MB plan that I'm on.
I pay $25 a month for actually unlimited data and text and talk. Republic Wireless can afford to do this because they are a wifi first provider meaning that when I make calls at home or at work it goes over wifi costing them nothing.
Thank you. I've been grumbling about subsidies for a long time, while still calling them subsidies. You're right though. They're extremely high-interest loans that nobody in their right mind would ever willingly take out.
I don't know about other carriers but AT&T has recently changed their model, so if you bring your own device (or buy one from AT&T at full price) you get a discount on your monthly bill.
I just bought an unlocked Moto G for ~$200, which is honestly a good enough device for my needs and a huge money savings over paying $200 up-front, plus an additional monthly charge, for a flagship device.
I see that they offer a discount for BYO devices now. That was not obvious to me earlier, even after looking at their web page.
Cell phone pricing should be a simple formula, but it is surprisingly difficult to find a good comparison of costs for an iPhone (or similar) from all of the different companies. What is AT&T Next, for example. The implications of paying $32/month and then saving $15 on the bill are not obvious.
Additionally, even if you like the cost structure of prepaid service better, you can't buy the same quality of service. The prepaid networks (and resellers like Cricket, etc.) are limited to a single carrier's network, and there are no roaming agreements for prepaid customers. So where a Verizon contract holder could hop on to a Sprint tower, a Verizon prepaid customer will have no service. Same with the other networks.
Most MVNO's do not offer roaming, but a few do. I am currently using Republic Wireless, which is Sprint based, but includes all of the regular Sprint roaming on Verizon.
$20/month for unlimited Voice, Text, and Data! Really.
The downside is that they only have a few phones to pick from, and I will probably in a few months for a provider with an iPhone option.
Subsidies on smartphones have traditionally been $400 to $450, not $600. Most current-generation iPhones have still required a $200+ upfront purchase on contract.
All three major U.S. carriers now offer plan rate discounts for buying the phone up front. E.g. AT&T offers $15-25 off per month, or $360-600 over the life of the plan. And of course T-Mobile doesn't subsidize at all.
I see amazon as a technology company for the 35+ non-tech demo. They're original core biz was book selling on the internet (I will let you decide where the core is now). They carved a niche for themselves in rackspace, but their retail has always been aimed at regular people. They are offering a phone at a competitive price point (after subsidy) that will have access to a massive amount of media (prime video, ebooks, audiobooks, their cloud infrastructure) and above all else, they have a reliable brand that will stand by their product and walk newcomers through using it. People who need a smartphone and are still intimidated by technology. The answer to Siri might just be a real live person (it will certainly work better short term, especially for UX) so I will let you decide if this price point makes sense. Virtually everyone buys contract phones and frankly live support, cloud access, media access, what will be a robust ecosystem, as well as what sounds to be a fantastic and powerful phone doesn't sound over prices @200.
One view is that , as far as eCommerce , mobile is really hard(very low conversion rate) and nobody has yet cracked the formula.This could be a very big risk to amazon if someone cracks it before them.
So they want to find the formula to do it right.and they must do it alone - because sharing data with others is risky. One good bet on the formula is a physical shopping button and the whole button thing. So they try.
But since it's only a trial and not a full fleshed phone with a business model(maybe it was at some point, but competition is hard and changed that),It makes sense to offer it in limited volume - more economical, easier to try new things over smaller groups, etc.
So the price is in order to sell to a few, but once they crack the formula, they prices will probably go down.
This same "trial" theory could also be true for mayday - because customer support is expensive ,but very valuable for a retailer.
One reason may be the same reason Apple don't sell a truly low cost, budget iPhone. Some people who can afford to spend more, and otherwise would spend more if their only options were more expensive Amazon phone, would buy the cheaper model. That's revenue you just threw away. If there is a premium market for an Amazon phone, it makes sense to cash in there first.
Another reason is that this may well be Amazon's budget smartphone in 1 year, 2 years or 3 years time. Pay one tranche of development costs now and ride the economic price curve down to lower production costs and higher market penetration.
Well with the contract, the phone is $199. If you then do the mental math of adding a free year of prime, a consumer can justify that as another $99 off, bringing the phone down to $100 in their head, which is considered "cheap."
Mayday is truly a new level of customer service, and makes the phone a great choice for those who might struggle with new technology -- like the remaining population without a smartphone.
That's definitely an interesting addition. In the past, I've bought Nooks rather than Kindles as gifts for elderly relatives, because of the ability to just take it to the nearest brick-and-mortar B&N in case of trouble (or even just to buy books). Mayday isn't quite as good as that, but a clear step up from what's typically available for smartphone tech support.
People who don't yet have a smartphone have many reasons besides cost. Older people who are reluctant to move from a true phone to a multimodal pocket computer may be very happy with paying for one that has instant customer support.
I got one of the original Kindle Fire tablets. It's not bad, but without all the Google stuff: gmail, maps, etc... it's just not as useful as my Nexus tablet.
As someone with more than a passing familiarity with geospatial, I was excited when Amazon announced their intention to work on their own maps product. IIRC, it was to be OSM-backed, and presumably integrated into their AWS offerings. I could see Amazon eventually creating a decent competitor to Google / Bing / Apple. But then on the other hand, Google > Bing > Apple.
Most people who are not in this field don't understand this but the reason most new smartphones will fail is simply because there is simply no quality options for maps available on those phones. Maps and local search is #2 or #3 most important thing on smartphones depending on which data you look at. If Google ever wants to kill iPhone, all they have to do is pull the plug on Google Maps app and slowly but steady users will floac off.
Unfortunately building high quality modern maps and local search that works world wide (or even just US for that matter) is extremely hard. Sure, you can buy data from NavTeq, InfoUSA and likes but what you will get in return is equivalent of MapQuest quality circa 2000. If you really want to build something that is at Google or even Bing level, you will need far more data, world class geocoding, rendering, partnerships from Yelp and likes, mining images and things like open hours from web, freshness to make sure you don't have closed businesses, huge staff to constantly fix and curate tail end, high performance tool set, huge serve infrastructure and so on.
And that's just for the start. To actually compete with Google or Bing maps you then need all other bells and whistles such as transit maps, walking directions, elevation profiles, building polygons, bird eye view, street views, information on construction, 95+% accurate turn-by-turn navigation among many other minor details that you completely take for granted.
To accomplish this level of features and quality, you will need staff that easily can could in couple of thousands and ability recruit the top talent in many fields including maping, cartography, rendering, indexing, distributed computing, machine learning, computer vision and so on. Even if you do get managed to accumulate this talent, it will still take multiple years to boot up and by that time your competition is already has moved on to next level.
I think you're completely right. For me, maps is absolutely the most important feature of my phone, followed by texting, then web, then voice. Bing isn't a bad runner-up to Google in a lot of ways, but it is clearly still a runner up. That last quality hurdle requires a lot of foot soldiers on the ground collecting data. Google has such a small army. Microsoft doesn't--at least not at the scale Google does. Apple's release was a facepalm for several reasons, not least of which was their omission of public transit routing. As an urban planner, I was incensed enough to drop IOS as my last phone upgrade in favor of Android.
Moreover, I would have liked for Apple to double down on open map data by creating the software and supporting infrastructure to collect geospatial data from all those portable, network-connected sensors they keep selling. I'd have put up with an inferior Apple map product if I could rationalize it in terms of them helping build OSM up.
The (mobile) web version of Google Maps barely works. It's slow, clunky, and often simply fails to load tiles. It is absolutely no alternative for a standalone navigation app.
Very good review, though I would only argue on one point. The author says it's unfortunate that Amazon heavily promoted the phone's most "out-there" features, while it really excels on usability and friendliness to the user. For me, this is easy to understand: the technical crowd that went to Bezo's presentation would be very disapointed if the phone's biggest feature was a customer support system.
The fact is: this phone is really not for us, the tech-savvy hackernews reading crowd. To the best of my knowledge, this is one of the first biggest tech introduction that only has real value to the "regular" folks that came out of the silicon valley culture (ok, ok, Amazon is not a silicon valley company, but it's as if it were). If I'm wrong and there are products aimed mainly at "regular non-tech folks" that came out of sillicon valley, please correct me.
I am really curious as to how this will unfold. As I see it, most of sillicon valley innovations followed the normal adoption curve: go for the innovators, then expand your market until you hit critical mass. Some were slower (Dropbox), some faster (IPhone), but they all had a very big feature aimed at the tech savvy as well. This is why I think Firefly may be a good thing, it's the bait for the tech people to adopt it and then, hopefuly, it will trickle down to the moms and pops out there. Honestly, then, I think of it mainly as a curiosity than something I would spend $600 bucks to have.
I agree that this phone is for the average person, it is also a V1. One advantage that Amazon has over the competitors is their abilities to directly market to the millions of users they have on Amazon.com daily. Think about how successful the kindle became, purely being sold on Amazon.com and being the first thing you saw whenever you went to the homepage. Now the first thing I see when I load Amazon is an ad for the phone... http://cl.ly/image/3i0c3f0C1f1u/Image%202014-07-23%20at%209....
> But the bigger question for most people isn't going to be "does this phone do anything useful"; it's "should I buy this phone rather than some other competing phone?" For the time being, the answer is no.
Amazon pretty much nailed the first iteration of the Fire Phone as much as they could for v1. It got the price point, features, and quality right.
It would be really easy for them to just hire LG or HTC to make an existing phone with an Amazon logo and call it a day, but they took their time to make their own thing.
judging from the overwhelmingly negative reaction to its price point, the evidence strongly suggests they got the price point wrong. at least until sales can be the final judge.
this is how their value proposition sounds to ME: I have less functionality than other phones, so I'm easier to use, but you still have to pay just as much for me as all the other more well endowed phones. but dont worry, theres some things i offer that you don't care about that actually makes me a small bit cheaper
however, I am certainly not like most other smart phone users. i will say this, people tend to not want to pay for customer service. someone who is intimidated by smart phones doesnt want someone easily available to tell them how to use it, they just want it to be easy to use.
If they priced it cheap, there isn't much benefit to them. At $400, it becomes a "free" phone, which means it's less valuable and not comparable to iPhone or Galaxy S.
Most people they are selling to don't buy their phone for real price, so what you're really talking about is up to $200 difference. If they priced it less than $400, they'd lose money in the subsidy and AT&T basically would make money on the deal.
At the end of the day the consumer isn't going to see it as a super expensive smartphone. They're going to see it as costing the same as the iPhone or Galaxy S.
Nobody says the iPhone or Galaxy S are too expensive.
Lots of people say the iPhone 5s or Galaxy S5 are too expensive, especially those people who want to upgrade mid-term, or who accidentally broke their device, or who are buying for children or others. Or who want a less expensive plan.
And as carriers start to prioritize or even promote bring-your-own plans (and make the actual cost more obvious), I suspect we're going to see a greatly increasing interest in lower cost devices. This is already happening as we move from smartphones being some sort of status symbol, to being tools.
There is a kind of disconcerting elitism that appears in many discussions about smartphones and the smartphone market - one where we all need to pretend that money is no object, and we're all super rich and careless with our money (two traits, as an aside, that are usually in absolute competition with each other). Reality doesn't mirror that at all. Indeed, it's in stark contrast with the release of this very phone which has overwhelmingly been met with criticism that it is far too expensive (many thought it would be $0 on a standard plan, or even on a reduced rate plan).
"The interface constantly sorts your apps according to how recently you’ve used them. This let me navigate my phone very efficiently, often saving me from getting lost in a sea of apps"
How does this work as a UI? I'm not a UI guy but I know a bad fad when I see one. Superficially, a big scrollable 2-d grid in alphabetical order makes life pretty easy as long as marketing doesn't rename apps too often. A random 1-d line sounds really hard to use.
As a use case example, I'm about to press the "add comment" button thats always aligned with the left and bottom edge of this bright background textbox, its very easy to find, repeatable (which is comforting and convenient) and fairly intuitive. Yet if you took every window decoration widget on my entire desktop and put them on a rotating ribbon in random order, it would probably take 5 minutes, every time I interact with it, to find and click "add comment".
I've seen this fad UI trend on other mobile apps, I find it a huge PITA and impediment to my enjoyment of the afflicted apps. 5 seconds of "oh hey, cool, flicks finger" followed by an eternity of "this sucks"
>I called up Mayday four times to pepper its agents with questions. In every case, a person popped up on the screen in under 10 seconds.
So a personal assistant just for your phone. That sounds like a fantastic feature. Is it something that can be sustained long term though without paying for it specifically?
I guess that question applies to Amazon generally too though, so I guess the answer is "I guess we will see."
Something tells me that Dynamic Perspective, as implemented on the Fire phone, might not have been an entirely awful experience to implement. A couple of points:
* Amazon isn't known for wasting time or money. They wouldn't have delayed the release of their first-ever phone for an expensive gimmick. Sticking a cheap gimmick on within time requirements is doable.
* 3D rendering is, well, a solved problem. Accelerometers have been incorporated into phone UIs for more than five years. Even facial detection is in most modern digital cameras. Tying these things together doesn't require sending a whole lot of information back and forth -- you just update a couple of vectors representing estimates of phone location and head location.
I wouldn't be too surprised, given Amazon's track record, to find that Dynamic Perspective started as kind of a "why not?". If people can make cool things out of it, they'll keep it: it might be partially a trick to get developers to target the device, and to make interesting things out of it. If not, it won't be missed.
>>Even facial detection is in most modern digital cameras. Tying these things together doesn't require sending a whole lot of information back and forth -- you just update a couple of vectors representing estimates of phone location and head location.
The problem is, that it's just not good enough. Even the Kinect 2, which from a developers perspective is a fantastic tool and I have never seen anything as good as it when it comes to full body tracking, it also sometimes messes up. And as a customer, I don't want gadgets in my phone that work 90% of the time. If I want to use the Dynamic Perspective and it works 9/10 times, it's just not good enough - I would rather turn it off.
It may be a problem for Amazon that they lack the global presence that their competitors in the phone market have. Amazon is big in the US, UK, Germany and Japan, but not in rest of the world.
Perhaps this is Amazon's stalking horse into the phone market.