If I'm interpreting that correctly, I don't see how that holds. People use smartphones/tablets/televisions to consume many things. Amazon products are just one of them.

I don't think that just because controlling the entire product ecosystem would work to Amazon's advantage means that customers will want a phone that enables that end-to-end control.

The end-to-end control works well for the Kindle, because eReaders are used really only for reading the books that are available only on Amazon's eReader marketplace. But I can shop Amazon from any device I want. So having a phone that owns that experience isn't a major value proposition for me. I'm much more interested in things like display, battery life, camera quality, sound quality, and the phone's popularity than which product ecosystem it taps into.

To me Amazon is working from a major disadvantage here. The technology doesn't seem mind-blowing, the device at first blush doesn't look remarkably different from what's already available, and since phones are largely subsidized by carriers, most customers aren't going to be hugely price-sensitive. If anything, people opt for the most expensive, newest phones. If Amazon is looking for the people who will spend the most money, they certainly won't be interested in customers who think $199 is too much to spend for a new phone that they will use every day for at least two years (which is a moot point since the phone is priced at $199).

Amazon sells you a device so they can show you an ad encouraging you to buy a rake. Amazon sells you the rake, has it delivered in 2 days, and makes 100% of the profit.

It's not that people will actively look for that integration, but that it exists gives Amazon a significant advantage imho.

Amazon sells you a rake made by a 3rd party who was put into FBA by a wholesaler and makes a reasonable cut of the profit in the process.

Amazon has more control but also takes all the blame when things go wrong.

Tbh, as someone who works at a business who does both the ads & selling stuff via Amazon as a manufacturer...Google actually makes more money off of us than Amazon does. I don't mean like a "little more money", I mean something like 5x as much money. This part is anecdotal obviously but I think you are very, very wrong in assuming that "Sell Product" > "Sell Ad".

Unless you only sell through Amazon, then a global comparison wouldn't be fair, because Google is semi-monopolist in ads while Amazon is far from it in retail. You should compare your average user acquisition cost with the wholesale margin left to Amazon; eg: how much does it cost to acquire through ads a user that buys products for $100? And how much of those $100 are left to Amazon?

When I say 5x, I mean Google gets 5x the amount of money than Amazon does. I think that is more relevant than a "per item" basis.

> Unless you only sell through Amazon, then a global comparison wouldn't be fair, because Google is semi-monopolist in ads while Amazon is far from it in retail.

It isn't my fault Amazon can't sell more of our products. ;)

> You should compare your average user acquisition cost with the wholesale margin left to Amazon; eg: how much does it cost to acquire through ads a user that buys products for $100? And how much of those $100 are left to Amazon?

That is a bad way of comparing for purposes of this conversation.

Amazon has to pay for shipping, pick & pack, customer service, return shipping, etc. That isn't free.

that would make it sound like amazon's current business model isnt working, which I think its doing pretty well. Amazon has razor thin margins for sure

Amazon's business model works. It just doesn't take "100% of the profits" by any stretch of the imagination.

Sorry if that was unclear.

Personally, I have a very much love/hate relationship with Amazon and I blame them, not the vendor.

I've had to issue a chargeback because of Amazon's incompetence...which most customer's probably haven't. It is literally the second chargeback I've ever had to do in my life, so it tends to stick with me more than it might for other people.

The eye tracking is nothing new and 3D as a sale gimmick crashed and burned years ago and I don't amazon doing anything revolutionary with it here.

If it were $200 unlocked then I can see it selling like crazy, but the current plan makes no sense, if amazon was providing the service as a MVNO and offered stuff like truly unlimited data and stuff then maybe, just maybe, but $199 for this phone and on AT&T? PASS....

That is clearly not the case with Amazon. "Just increases their profits" is pretty much the only thing that matters. Dominant market share comes much later, if at all. Dominant market share might even be a bad thing, if attaining it requires a race to the bottom. Most companies would (and should) prefer to sell a million devices with decent margins than 10 million devices with little or no profits. Amazon is known for pursuing market share at the expense of profits, but that's often not the best strategy and they can be excused for not taking it this time.

It's also better from a risk management perspective. For the first iteration of a device like this, it's less risky to try to sell a few of them at reasonable margins then to try to sell a gazillion of them at razor thin margins. The price of failure is far less, and depending on how this one does, then the next time around they can start adding cheaper models and gradually expand the user base. Or not, their choice. It's not always worth it.

If they can leverage that to reduce buying friction, then yes, that's exactly the right move!

At $199, my gut tells me that the early adopters of this phone will largely be people who already use Amazon regularly.

The term "big winner" to me implies that the thought process is that they will win out over Samsung and Apple in the long run, but I don't think that is very likely anytime soon. I don't hate the move by Amazon because you have to start somewhere, but predicting them the winner as this device is first launched is very optimistic in my eyes.

Amazon's dominance is always a 'future certainty', meanwhile Apple eats it's lunch.

i.e. "iTunes, Software and Services has been growing between 30% and 40% for four years and is on its way to $30 billion/yr in transactions and sales for 2014."

http://www.asymco.com/2014/05/09/measuring-not-getting-the-c...

   Apple: Sell at high price, modest tie-in revenue.
   Google: Sell at low price, modest tie-in revenue.
   Amazon: Sell at low price, high tie-in revenue.

Revenue =/= profits. Amazon is a middleman and are only successful at generating revenue growth because they don't make profits.

Plus most of their sales were B2B where brand loyalty means little for commodity products, esp. given the high tie-in strategy.

Apple: We sell an experience of software and hardware. Google: We sell ads, based on data we gather from our users. Amazon: We sell commodities\services as close as possible to the marginal utility, so we're very competitive.

Altough each of these tech giants are competing, each has quite a different strategy.

As for the Fire phone, I think that Amazon realized that they could deliver an excellent shopping experience from the mobile phone. This would enable massive future growth: Think about going home in the train and buying groceries instead of driving to your nearest Wallmart.

I think you are vastly under-estimating Apple's dominant position in the fastest-growing and most profitable category of "selling other stuff": digital content. Itunes is on track to $30 billion revenue this year with huge yearly growth several years in a row. That is almost half of all Amazon revenue combined! And presumably with vastly better margins, too.

In the next decades people will spend more and more on digital goods (Apple's turf), at the expense of physical goods (Amazon's turf). Amazon will do anything to avoid being leapfrogged that way. They have a very strong cloud infrastructure story, obviously, and are playing decent catch-up in many other areas, but in the grand scheme of things they are very far from the guaranteed winners.

Until Google or Amazon comes out with a truly gorgeous easy to use interface and a metal/glass phone I don't see them competing with Apple.

EDIT: Apparently the Fire Phone has a glass back, but it looks like plastic bevels. No thanks.

I see this a lot of HN, and I wonder if people are just assuming? To put it into context, I see far more ads on my iPad and iPad Touch than I ever have on my Nexus 5.

Outside of the money Google makes from their book, video, and apps stores, they sell the technology to ensure that their services remain viable, and cannot be cut out of the market. They make the platform so Google has less concern about being cut out of the ecosystem.

I mean we see the paradox on here constantly where people will gloat about how much more valuable iOS users are to advertisers, but then that Android is a platform for ads.

Aside from web content and occasional visits to the app store I don't think that I can ever recall seeing an advertisement on any of my iOS devices.

That said, it may be the case that web-based advertisements are targeted at and/or tailored for iOS/Mobile Safari.

If you mean website ads, then you can thank Google for that - I'm pretty sure that a significant majority of all web ads use Google's ad networks. Of course, thanks to Apple's double-tap for zoom, I usually bypass most of this visual cruft when browsing on my iPhone.

True, but let's not ignore that their core business is selling advertising. Before Android came along that business was at the mercy of Apple (in the mobile space anyway).

>I mean we see the paradox on here constantly where people will gloat about how much more valuable iOS users are to advertisers, but then that Android is a platform for ads.

Android isn't specifically a platform for ads, but it was indeed built so that Google wouldn't lose the ability to serve ads on mobile hardware.

The NFL is primarily sponsored through network agreements, which themselves are primarily sponsored through advertisers. Is the "core business" of the NFL, then, advertising?

Of course it isn't. Such an argument is specious to the point of uselessness, and only appears in the form of rhetoric. The NFL's core business is making an entertaining sports product that people like watching, and then they find ways to monetize from that.

Apple operates and promotes its own ad network, and its lack of success in that market doesn't somehow separate it from that reality. No one would claim that Apple's core business was iAds.

IBM's core business is monetization, by definition. Making services that enterprises like to use is what they do to feed that core business, not vice versa.

Walmart's core business is monetization, by definition. Selling goods that people like or need is what they do to feed that core business, not vice versa.

Toyota's core business is monetization, by definition. Selling cars that people like or need is what they do to feed that core business, not vice versa.

The local florist's core business is monetization, by definition. Selling flowers that people like is what they do to feed that core business, not vice versa.

Every for-profit's core business is monetization, by definition. Performing a large variety of things that make money is what they do to feed that core business, not vice versa.

Android has existed for the entire time mobile advertising was becoming huge. The iPhone was a big innovation, but in its first year it wasn't nearly the mass market device it is now, and its impact on mobile advertising at the time should not be overstated. Mobile and mobile advertising only started becoming really big in 2010.

I don't think Android was built with the specific goal to directly put Google's services into people's hands. I believe Android was built and released as free to be used by anyone to create an easy-to-use platform for any vendor with very capable connectivity features. It was hoped that this would increase use of Google's services on mobile, not because Google was forced into the market, but because people would have devices capable of web services in general.

Android seems to be made with a goal of making a market, not taking a market. That is why there is this diverse market for Android, and that's why all those associated problems exist. Its strategy also directly made possible this Fire Phone.