The Amazon Fire Phone has been hammered by the media as a colossal failure. There’s at least a story a week about the device’s disappointing launch — and Amazon has been running promotions and fire sales (sorry) for months now. When the phone came out, it was tied to AT&T (which took it out of consideration for me without needing to look at a single feature or review). Since then, the phone has also been sold unlocked for use with any carrier, occasionally for less than most smartphones cost with a carrier’s subsidy (you can get one right now for $449, unlocked. But that price has occasionally dipped below $200).
Amazon took a write-off on its unsold stock of Fire phones last quarter to the tune of $170 million. That’s a lot of money. Or as one commentator pointed out, it’s basically a Hollywood flop for a film studio. Which they suffer all the time. Some are calling this an existential crisis. Others are more cautious with their criticism, remembering the reviews and doubts about the original Kindle. Amazon CEO Jeff Bezos recently said that Amazon would be doubling down on its investment in the Fire phone and iterating until they get it right. And they need to. Pundits who say Amazon is making a mistake to develop a phone don’t seem to understand what’s at stake. Shopping began moving online two decades ago. Now it’s moving mobile.
Online shopping is still a fraction of total consumer shopping, and mobile is a fraction of that fraction, but both are gaining steam and present massive opportunities for whoever gets it right. My money is on Google for the interface and market share of eyeballs. My money is on Amazon for the distribution network and shipping speed. Google needs to solve the latter, and Amazon needs to solve the former.
Amazon already has the best and most popular online shopping interface, but Google is making major strides in that department. Search for a product on Google, and you’ll often find a better price from a non-Amazon vendor (I did recently, and the product is shipping from Italy for less than I could buy it here). The shipping might be slower this way, so it’s a matter of how quickly you need the thing. Google search dominates lives in a way that only Facebook can match. A staggering number of people interface with the internet by starting with Google. They go where Google’s algorithms take them. By offering the Android operating system for free, Google has crushed all competitors for mobile OS market share. So more mobile searches start with a Google search, which is great for Google shopping.