Amazon ties new 4.7-inch phone to its services

SEATTLE -- Amazon unveiled its first smartphone Wednesday, a device that assists shoppers by using six cameras that can make sense of its user's face and the world around it.

The phone's most significant feature, called "Firefly," employs audio and object recognition technology to identify products and present the user with ways to purchase the items through Amazon. Users can simply snap a photo of a book, for instance, and Firefly will offer up its title and author, give more information about it and provide ways to buy it.

Seven years after Apple's iPhone took over the category, Amazon CEO Jeff Bezos believes there is room in the market for something different. Even with the dominant leads that Apple and Samsung hold, Bezos said, "it's still early" in the wireless device business.

People change phones all the time, he said. It's not about taking market share right away, but making a phone that is ideal for a certain customer and hoping it takes hold.

"We wanted to make a device that's great for one person," Bezos said. "It's like a certain person likes chocolate and another person likes vanilla. The customer can choose."

While the new Fire Phone comes with some features that are practically industry standard -- like a slim profile, a sturdy glass touchscreen, minimalist buttons and one camera for facing toward and away from the user, it breaks new ground in other areas.

The phone's Firefly object recognition feature can identify items and product names captured with the device's camera. It can also pull in useful information such as phone numbers and website addresses. The company has cataloged more than a hundred million items that Firefly can recognize and has tweaked the technology to recognize words and characters in a variety of real-life situations.

Another feature, called "dynamic perspective," uses four infrared, front-facing cameras that tell the phone where the user's face and eyes are located. The feature adjusts the user interface so that tilting the screen relative to the viewer's face can toggle through screens, scroll through websites, make online video game characters fly up or down, and render buildings and other custom-made art in 3-D.

Both features will be available for developers to build into their own apps.

The entry-level Fire phone costs $199 with a two-year AT&T contract, which places it at the high end of smartphone pricing. But the phone comes with 32 gigabytes of memory, double the standard 16 GB. It also comes with 12 months of Amazon Prime, the company's free shipping, video, music and book subscription plan, which normally costs $99 a year.

Bezos insisted the company wants to play in the premium phone space and introduce a product that goes beyond what is already in the market.

"This is a very aggressive price point for a premium phone," he said.

The new device fits with Amazon's broader aim to create a more efficient shopping experience while steering more consumers to its retail products.

"It goes back to the mission of Amazon, which is to sell you stuff," said Ramon Llamas of the research firm IDC. "It reduces the number of steps it takes to buy things on the phone."

Fire also comes with a 4.7-inch screen in the 16:9 aspect ratio, suitable for using with one hand. The device also comes with earbuds with flat cords and magnets that are designed to eliminate tangles.

Persuading consumers to buy the Fire over an iPhone or Samsung phone will be tough, analysts say, particularly because Amazon isn't offering price breaks the way it has with Kindle tablets. And sophisticated technology such as 3-D will appeal primarily to early adopters of technology.

"The technology's cool, but consumers don't buy technology," said Julie Ask, an analyst at Forrester Research. "We buy solutions. We buy services. We pay for things that make our lives easier."

Charles Golvin, founder of Abelian Research, believes the phone will appeal mostly to people who already use Amazon services heavily.

"Any loyalist of iPhones or Google is going to have to judge whether there's enough value in what Amazon is offering with Fire to make the transition," he said.

Samsung and Apple dominate worldwide smartphone sales with a combined 46 percent share, according to IDC. And in the U.S., Apple leads with more than 37 percent, with Samsung at nearly 29 percent.

Amazon could potentially succeed even if it doesn't steal market share from the top phone makers.

Michael Scanlon, managing director with John Hancock Asset Management, said success or failure will be measured by whether Amazon can increase loyalty among its Amazon Prime members and get them to boost purchases.

Amazon is giving Fire owners a free year of membership, which normally costs $99, and existing subscribers an extra 12 months of membership. Prime offers free two-day shipping, encouraging impulse purchases. It also offers free access to some movies, TV shows, music and books and could encourage consumers to buy additional content, once they are used to the offerings.

Meanwhile, Firefly could encourage more purchases. The feature lets you snap bar codes, phone numbers and more. It can even direct you to facts and data, such as a Wikipedia entry with information about a painting you snapped. It listens to songs, TV shows and movies and can pull up extra info like lyrics, actor bios and other information through its IMDb database.

Ask said Amazon could learn more about how people use phones and design future services based on that knowledge.

The phone will be available July 25 in the U.S. exclusively through AT&T. People can start ordering it Wednesday.

Prices are comparable to other leading high-end phones, but the Fire will have double the storage. It will cost $200 for a base model with 32 gigabytes and $300 for 64 gigabytes. Both require two-year service contracts. Without contracts, they will cost $650 and $750.

The decision to make AT&T the exclusive carrier is similar to the approach Apple took when it unveiled its first iPhone in 2007. AT&T had exclusive rights to the iPhone in the U.S. until 2011, when Verizon and eventually others got it, too.

Amazon's stock rose $8.76, or 2.7 percent, to close Wednesday at $334.38.

Analysts believe it could take years to tell whether Amazon is successful. Bill Menezes, a research analyst at Gartner, said it took Amazon a few tries before coming out with a tablet that rivals Apple's iPads on both price and technology.

For now, he said, the Fire doesn't offer much that isn't available elsewhere.

Many of the Fire's apps, including music and books, are available on other devices already. The exception is the app for Amazon's video services, which isn't available for Android.

Beyond the four infrared cameras to render the 3-D images, there's a regular 2-megapixel front camera for selfies and a 13-megapixel rear one for regular shots -- both standard for phones.

Amazon is offering unlimited free storage of photos on its Cloud Drive service. Google already offers this for Android phones, though at lower resolution for the free storage.

The Fire phone also shares many characteristics found in other Amazon devices. For instance, the phone will offer supplemental content about movies and TV shows through a feature called X-Ray. And there's a Mayday button for live tech support.

------

Anick Jesdanun reported from New York.