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Will Amazon's Smartphone Bring the Pain? Four Points to Consider

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Amazon is widely expected to unveil a smartphone on Wednesday, June 18.

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On Wednesday, June 18, Amazon.com (NASDAQ:AMZN) will hold a highly anticipated launch event for what will likely be its first smartphone, pitting it against the likes of Apple (NASDAQ:AAPL) and Samsung (OTCMKTS:SSNLF).

Amazon sent out the following teaser trailer on June 4, featuring a mystery device that appears to have some kind of 3D and/or motion control capability:



This screenshot from the video more or less confirmed the rumors that the device in question is a smartphone:



But will it sell?

That's the question on investors' minds, so let's explore it within a four-point matrix.

1. Distribution

The Wall Street Journal reported this morning that AT&T (NYSE:T) will be the exclusive carrier for Amazon's smartphone. AT&T has 116 million wireless subscribers, giving it about 40% of the US market.

That's a decent place to get started (the iPhone started as an AT&T exclusive), but without extension to other carriers, mathematically, there's no chance of a significant market share gain.

2. The Prime Angle

In April, Boy Genius Report cited sources indicating that a special wireless data plan called Prime Data would be part of Amazon's smartphone strategy. One possibility floated by BGR was a sponsored data plan in which Amazon would pay the data fees for certain apps.

These days, it's incredibly difficult to differentiate a smartphone -- but a compelling, smartphone-specific data plan could make for an interesting selling point.

Maybe if you buy an Amazon smartphone with a two-year agreement, you get Amazon Prime for free? Or what if Prime subscribers get some special data plan discount or privileges?

3. Bells and Whistles and Interface Challenges

Amazon's hardware products like the Kindle, Kindle Fire, and Fire TV are largely designed to sell digital content, and that can come at the expense of the user experience.

For example, on Fire TV, there's no central location for free Amazon Prime movies and TV shows. Most of it is interspersed with paid content, and it can be confusing to navigate. (I outline many usability issues in my Fire TV review.) The new Prime Music service is also quite flawed.

The Kindle Fire tablets are a bit better in this regard, but they lean toward simplicity and push Amazon apps pretty hard. Smartphone users require a much more diverse experience beyond media consumption. Based on my experience with the Fire TV specifically, which handles a huge variety of apps and tasks, I doubt Amazon is up to the Apple iOS gold standard.

So that means whatever bells and whistles pop up, they had better be really, really impressive.

Remember, in recent history, tech bells and whistles haven't gone very far. Microsoft (NASDAQ:MSFT) pulled the Kinect off its Xbox One so it could lower the price, 3D TVs and cameras haven't made much of a splash, and Nintendo's Wii U bombed despite having a pretty interesting tablet-like controller -- though that situation may be about to change.

4. Apps

Amazon's Kindle Fire series and the Fire TV run on a modified version of Google (NASDAQ:GOOG) Android, which means compatibility with Android apps.

Amazon has bypassed the Google Play Store to focus on its own Appstore. Amazon even announced yesterday that its Appstore was up to 240,000 apps, having tripled in size over the past year. For comparative purposes, there are 1.2 million apps on Google Play and 1 million in the Apple App store.

But the sheer volume isn't the problem -- it's the fact that Amazon Appstore also has quite a few notable very-smartphone-centric omissions, like Instagram and Snapchat.

This could be a big sticking point for potential switchers.

Now you can technically load other Android apps through a process called sideloading, but it's a hassle to anyone used to obtaining Android and iOS apps with a few simple taps on the screen.

Conclusion

The stakes are high and the obstacles are clear. Amazon has to bring something big tomorrow if it expects to succeed in the increasingly rough smartphone war.

Twitter: @MichaelComeau

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