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Amazon's Fire Phone Is About Survival, Not Burning Apple

Stocks in this article: AMZN AAPL T BBRY NFLX P

NEW YORK (TheStreet) -- Wall Street's worst-kept secret for the past two years was finally announced Wednesday when Amazon (AMZN) lifted the curtain on its Fire Phone smartphone, available for purchase July 25.

Now we watch for whether the Fire will be a success along the lines of Apple's (AAPL) iphone after its debut seven years ago.

There are similarities -- both companies turned to AT&T (T) to be its exclusive wireless carrier. The price is kept lower if you sign a contract, in the Fire's case $199 with a two-year contract. A non-contract phone will be priced at $649, in line with the iPhone 5C.

The debate has been over whether the Fire Phone can burn Apple. Will Apple's stock lag until it is made clear  iPhone sales will not decelerate. Those are all the wrong questions to be asking.

Fire Phone is no direct threat to Apple. Nor will Fire Phone spark additional upside to Amazon stock in the near term. The bottom line is, they both can co-exist -- but only Apple stands to make money on the hardware.

While there are a lot of similarities with Apple's original iPhone launch, including the fact that that Fire Phone will be made available only in the U.S., Amazon CEO Jeff Bezos has no interest in competing with or beating Apple. Apple's moat, or all of its combined competitive advantages, is already too large.

Rather, as with Fire TV and Kindle Fire and so on, Amazon is looking to duplicate Apple's advantages. Fire Phone is just another means of survival.

Consider the other announcement Wednesday on BlackBerry (BBRY). BlackBerry has partnered with Amazon in an app licensing deal that allow BlackBerry devices access to roughly 240,000 Android apps from Amazon's app store.

While the deal is helpful to BlackBerry, it's also an embarrassment that BlackBerry, which had all of the first-mover advantages in the smartphone space, does not have a viable ecosystem of its own. This is what Bezos is trying to avoid.

The problem is, Bezos' never-ending ecosystem/infrastructure buildout will continue to cost Amazon plenty of money while causing many sleepless nights for its shareholders. To that end, whether Fire Phone sells well won't matter.

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