Contact Us


Disruptive Competition Project

655 15th St., NW

Suite 410


Washington, D.C. 20005

Phone: (202) 783-0070
Fax: (202) 783-0534

Contact Us

Please fill out this form and we will get in touch with you shortly.
Close

3 Potentially Disruptive Aspects of the Amazon Fire Phone

· June 18, 2014

Amazon entered the smartphone scene in a major way today with its much hyped Fire Phone.  Although technology reviewers are furiously picking over the products new specs, such as its 3D screen, 13 megapixel camera and the dynamic perspective technology, I wanted to step back and examine how the tech embedded in this phone can accelerate the disruptive innovation already taking place in the tech ecosystem as we speak.  One particular feature of the phone deserving attention is the Firefly technology, which allows users to use their phone’s camera and microphone to directly identify objects, products, movies or songs in the real world and take actions based on that recognition.

I will take a more detailed look on what Amazon’s entry means for competition in the smartphone world in a follow up post, but without further ado, here are some disruptive aspects of the new Amazon smartphone:

1) The Fire Phone makes showrooming amazingly simple

Showrooming is a well-documented phenomenon.  For years, customers have been using plain old search engines and/or barcode scanners to view items in a physical store, and purchase them from a cheaper source online (often that place is Amazon).  To the dismay of big box stores, Amazon made this process a whole lot more seamless.  By simply pointing the phone’s camera at an object and pressing the Firefly button, the phone can identify an object, and if it is a commercial product it can take you to Amazon’s website to purchase it online.  Couple this with Amazon Prime’s free 2 day shipping, and showrooming is a whole lot easier and more convenient than it used to be.  (Note: This doesn’t mean the physical store and retail real estate is dead, it just changes the value proposition.  Physical stores are increasingly being seen by major brands as equal parts advertising and vehicles for retail sales.)

2) Amazon Firefly directly competes with search engines

Although we have been saying it for quite awhile, search engines are not a market in and of themselves.  They are a convenient mechanism for users to get answers.  The market share of traditional search engines is continually being eroded by mobile apps and targeted information products such as Yelp, IMDb, Facebook, LinkedIn and Foursquare.  If I want a recommendation for a Mexican restaurant, information about an actress or the bio of a potential business partner, a general purpose search engine is no longer my navigation tool of choice.  Amazon takes one big step further down this general path.  Amazon’s Firefly lets users cut out a search engine altogether for many of their most common mobile searches.  For example, the user can point the camera at an object and be redirected to a website that gives him or her more information about it.  Point the phone at a famous painting and the camera recognizes it and takes you to a Wikipedia page about the painting.  Point the camera at a bottle of wine, and Amazon syncs with the Vivino app that gives you information about the wine.  And, perhaps most importantly to Amazon, point the phone a commercial product, and Amazon takes you to a page to buy it directly from Amazon’s store.

3) The Fire Phone leverages Amazon’s prior disruptive innovations

Amazon has a long history of aggressive disruptive innovation.  First, it threw the retail world on its head by creating a massive e-commerce competitor to brick and mortar stores.  Second, it leveraged the knowledge and technological expertise (and raw server power) that it developed running one of the world’s biggest data centers, and made its own IT infrastructure (and developer tools) available to the rest of the world via Amazon Web Services, thus transforming the IT ecosystem permanently.  No longer did small- and medium-sized businesses need their own server rooms.  And, with the introduction of the Kindle Fire tablet, Amazon integrated its first tablet with both its online store and vast cloud infrastructure to deliver high performance computing to customers for a fraction of the price of other tablets.  Then, it kicked its retail disruption into high gear by introducing Amazon Prime, which for a fixed fee allowed customers unlimited expedited delivery on their Amazon store purchases.  But it quickly went beyond just a bulk shipping deal, and expanded Amazon Prime offerings to include premium video content and streaming music.  That trend continues with the Amazon Fire Phone.  Not only does the phone come with a full year of access to Amazon Prime, but it also gives customers unlimited cloud storage for their pictures and videos.  As one tech journalist noted, the new Amazon phone is basically a delivery vehicle of Amazon Prime’s expanded suite of products.  With this phone, Amazon has created a more fully integrated customer experience from one’s smartphone that has the potential to speed disruption of traditional business models, such as the traditional retail and content markets, as Amazon Fire Phone owners have a vast array of entertainment and commercial options directly at their fingertips.

Competition

Some, if not all of society’s most useful innovations are the byproduct of competition. In fact, although it may sound counterintuitive, innovation often flourishes when an incumbent is threatened by a new entrant because the threat of losing users to the competition drives product improvement. The Internet and the products and companies it has enabled are no exception; companies need to constantly stay on their toes, as the next startup is ready to knock them down with a better product.