Amazon unveiled its first smartphone -- the Fire Phone -- on Wednesday, plunging into the highly competitive world of smartphones dominated by Apple and Samsung as part of its plan to convince consumers to buy more from its online megastore.
The phone, which includes a limited-time offer for a free year of Amazon's $99 Prime shipping and content services, goes on sale on July 25, exclusively through AT&T, according to listings on AT&T's and Amazon's websites. The Fire Phone starts at $199.
"Can we build a better phone for our most engaged customers? Can we build a better phone for Amazon Prime members? The answer is yes," CEO Jeff Bezos told a crowd of 300 journalists, developers and members of the public, all of whom had to apply for their seats at the event in Amazon's hometown of Seattle. Bezos said a total of 60,000 people had asked for an invitation.
The Fire Phone can display 3D images and 3D maps, supports 3D gaming, and features a way to scroll through Web pages simply by tilting the phone. As for the design, it sports a 4.7-inch display with Corning's Gorilla Glass 3 technology, a rubber body, and aluminum buttons. It has a 13-megapixel rear-facing camera with image stabilization, and comes with unlimited photo storage on Amazon Cloud Drive. Check out CNET's first take on the Amazon Fire Phone.
The phone will cost $199 for a model with 32 gigabytes of storage and $299 for a version with 64GB. Both are sold exclusively with wireless service from AT&T, according to the carrier's site. By comparison, both Apple and Samsung offer 16GB versions of their popular smartphones, the iPhone 5S and Galaxy S5, for $199. Higher storage capacities cost more, as in the case of the 32GB iPhone 5S, priced at $299. Essentially, the Amazon phone offers double the storage for the same price.
'Amazon in the palm of your hand'
Amazon's move into hardware beyond e-readers and tablets fits into an overall strategy of selling customers devices that make it easy to shop from Amazon. It further pits the e-commerce giant against its rival tech titans and gives Bezos another way to lock customers into Amazon's massive retail ecosystem. As with Amazon's other devices, the Fire Phone will run on a modified, or forked, version of Google's Android operating system.
"Fire is the only smartphone to put everything you love about Amazon in the palm of your hand," Bezos wrote in a note on Amazon's home page.
Investors seemed happy with the news. Amazon's shares were up 2.7 percent, or $8.76, to $334.39 at the close of the market.
The Fire Phone offers a new feature called Firefly, a program that can scan and recognize objects, images and music, allowing users to pull up information on the products or buy them from Amazon. Firefly, which is accessible with a dedicated button, can even scan a number and call it.
"Firefly recognizes a hundred million different items in real-world situations," Bezos said. Some of Firefly's features sound like an extension of the Amazon Dash, a barcode-scanning wand that Amazon is testing with its AmazonFresh grocery delivery customers.
Patrick Moorhead, principal analyst at Moor Insights & Strategy, said the phone's implementation of object recognition is the most sophisticated he's ever seen on a device. That said, the advanced features may also make it hard for Amazon to actually sell the phone to its usual hardware customers.
"I can't imagine that the newbies that buy the Kindle Fire, which is all about simplification, buying a Fire Phone," he said. Amazon's most loyal customers, most likely Prime members, probably don't seek out phones that have so many bells and whistles.
Amazon Prime was front and center at the event, with Bezos once again boasting about its "tens of millions" of Prime customers.
"These individual customers do love Prime. Amazon Prime brings so much joy to the world," Bezos said while displaying glowing customer tweets about Prime on the screen behind him.
Prime members get access to several services, including two-day shipping, media streaming, and e-books. The program is central to Amazon's strategy, which contends that customers spend more money when they have unfettered access to millions of products and thousands of movies, books, and music.
Firefly ties in with all of these services, which includes entertainment features like Audible, WhisperSync, Amazon Music, and X-Ray. The phone will also have Mayday, Amazon's customer service tool, for Wi-Fi and 4G.
Bezos tied Prime back to the company's line of hardware and its customer service reputation before unveiling the Fire Phone. He also took great care to point out the phone's camera, comparing its low-light images with those of the Galaxy S5 and the iPhone 5S. Similar to many Windows Phone devices, the Fire Phone has a physical button to launch the camera. The device also has dual stereo speakers with Dolby Digital Plus virtual surround sound and "stay-flat" cables with premium earbuds.
Prior to the launch, analysts were curious about what features the phone would have aside from the much speculated 3D technology, which has been considered more gimmick than a real draw.
"When you're first to roll out brand-new hardware features, then developers don't know what to do with it and consumers won't," Forrester analyst Julie Law said prior to the announcement.
Amazon has a small but quickly growing app store, which features 240,000 apps, nearly triple where it was a year ago. In contrast, Apple and Google have more than 1 million apps apiece.
The phone was not expected to lure any customers over from Apple or Samsung's popular, and more expensive, flagship devices, but instead cater to those who either have yet to invest in a smartphone, or have no loyalty to other low-end brands.
It was expected that AT&T would be Amazon's service partner for the smartphone. The two companies have worked together in the past with AT&T providing the wireless service for Amazon's tablets and e-readers.
Rumors about a smartphone had swirled around the company for several years. The phone was created at Lab126, Amazon's development facility housed in the heart of Silicon Valley, according to Bloomberg. Code-named Tyto, the device is one of the unit's longest-running projects, possibly going back as far as 2009.