July 30, 2014
Amazon Phone: Will it Crash and Burn?
Amazon got some bad news recently when it was announced that poorer than expected profit numbers led to stock prices dropping, by nearly double digits in some reports. Some blamed intense market scrutiny that accused analysts of making too big a deal of micro level numbers. The implication then, is that companies such as Amazon or Pandora, which also showed a significant slip, are simply the latest victims in an increasingly minutia-inspired game.
Others are blaming recent expansions and what some are calling missteps for investor uncertainty, while there are some who are coming right out and blaming the Amazon Fire smartphone, calling the device a commercial albatross. And, since a smartphone is the product most consumers can identify with, that’s the story that is getting the press.
Amazon unveils new cellphone despite lower than expected profits
Because so many consumers are buying their mobile devices based as much – or more – on brands versus features and functionality, new players in the market really have to do something special to stand out. And that, say the critics, is where the Amazon Fire, much like its larger sibling, the Kindle Fire, fails. The larger Fire failed to differentiate from the industry leading iPad and gradually gaining Samsung Galaxy tablet. The cute commercials with the SOS answer girl may have come too late to save the Fire, as it still lives in the single digits in market share.
It may have been possible for the Fire phone to come on strong and make a major market splash in the same way the Samsung Galaxy did, but the phone released with little fanfare and even less market identity. People were not give a REASON to switch over, and the competition was giving them plenty of reasons to stay.
This scenario is a sharp consumer PR lesson for Amazon and any company with two distinct business arenas – stuff that the market understands and stuff that the average consumer cares about.
Even if investors understand why consumer confidence is down, many still like to play it safe, putting their money where the consumers’ mouths are. And, in this case, Amazon looks to be the loser. Does that mean they scrap the phone and concentrate on the market lines that made them an international powerhouse? Probably not in the immediate future, but that’s a question only Bezos’ team can answer.
In the meantime, the PR team promoting the Fire needs to get on the stick. Their time is almost up.