This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Will Amazon Get Burned by Its New Fire Phone?

Stocks in this article: AMZN AAPL QCOM GOOG GOOGL SSNLF T

NEW YORK (TheStreet) -- Amazon (AMZN) is launching its first mobile phone featuring a unique 3-D interface and the ability to automatically recognize objects and purchase them directly from Amazon's Web store. It will be competiting against the more established phones and operating systems of Apple (AAPL), Google (GOOG) and Samsung (SSNLF).

When the company announced the phone last week, Amazon shares climbed 2.7% to $334.38 only to fall, after peaking at $338.13 early on Thursday. Amazon closed Wednesday at $327.44, down nearly 18% for the year to date but up nearly 20% for the past 52 weeks.

Should you buy Amazon shares? For the company itself, yes; for the Fire, maybe not.

Consider, Amazon's new Fire phone is intended to be a direct competitor to Apple's iPhone and Samsung's Galaxy S5 with a price of $649 without a contract or $199 with an AT&T (T) contract.

Sweetening the pot, Amazon is also offering Fire purchasers 12 months of free membership to the Amazon Prime two-day delivery and content streaming service. This fits in nicely with the phone's ability to recognize real-world objects and purchase them from the store with just a few clicks.

Amazon's e-reader experience gives the company one small advantage because it has already had a significant amount of time to develop a streamlined system for delivering e-books and other media to customer devices via its Kindle platform. The new Fire smartphone must be able to build on this experience for the company to succeed.

The smartphone market is dominated by industry heavyweights Samsung and Apple, which in the last decade have pushed previous leaders Motorola and Nokia (NOK) to the side. Samsung is a household name in Asian markets in particular and is unlikely to yield much of its share to Amazon, which doesn't have much of a footprint in the region.

However, in western markets Amazon may be able to tilt some smartphone owners' loyalty from the iPhone and Google's Android offerings based on customers' previous good experience of Amazon's web store. But the app ecosystem is definitely Amazon Fire's weakest link. With just 200,000 apps available, it pales in comparison to the more than a million apps that both Google Play and Apple each offer.

Some may see Amazon's offering as simply a glorified shopping machine. Even CEO Jeff Bezos portrayed the product, during its unveiling, as a gateway to buying from Amazon's Web site. It's a compelling feature for those who already do most of their shopping from Amazon, particularly with the year's subscription to Prime thrown in.

The Fire only being available with AT&T is another disadvantage considering you can buy an iPhone or  Android phone at any carrier.

How are Apple and Samsung likely to respond to Amazon's smartphone offering? The Fire has a superior screen size to Apple's current range of iPhones but is in a firm second place versus Samsung's S5. Fire's slight screen size advantage is likely to be short-lived, however, considering the reports the iPhone 6 is likely to have a bigger screen.

Also, the Fire comes with Qualcomm's (QCOM) Snapdragon 800 CPU, a processor released in 2013. With Apple likely to release its new A8 chip with its latest iPhone, it will have another significant advantage over Amazon as well as its already superior selection of apps.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs