Why Amazon's Unveiling of Fire TV Was Underwhelming

NEW YORK (TheStreet) -- Amazon (AMZN) shares were falling 1.9% to $335.55 on Thursday following what at least one analyst has called the launch of Fire TV as "underwhelming."

Amazon's Fire TV is the Seattle company's version of a set-top box streaming device, which competes directly with Apple (AAPL) TV, Google (GOOG) Chromecast and Roku.

Amazon boasted Wednesday at a press conference unveiling the device that it was "thinner than a dime," had faster processing to alleviate buffering issues, enabled voice search and access to tons of content from Netflix (NFLX), Hulu Plus, WatchESPN, and YouTube, plus over 200,000 movies and TV episodes from Amazon Instant Video. The device also offers users music and mobile games to the TV. Amazon is selling the device for $99 and will offer a free month trial of Amazon Prime and Netflix.

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Wall Street analyst Michael Pachter of Wedbush Securities was not impressed with the launch. Pachter rates Amazon at "neutral" with a price target of $330. "We thought Fire TV's debut was underwhelming, and believe that Amazon missed an opportunity to introduce a highly-differentiated device," Pachter writes in a note.

"We believe that the primary use for Fire TV will be video streaming through Hulu Plus, Netflix, and Prime Instant Video, three applications that are already available on a slew of other consumer electronics devices, including Fire TV's primary competition. With similar application availability and pricing for Fire TV and its competition, we remain unconvinced that buyers will opt for Fire TV at the expense of Apple and Roku, particularly among non-Amazon customers," he writes. "Further, most gaming consoles already provide access to these streaming services, making Fire TV another entry in an already crowded space. Although Amazon has many notable partners lined up, we do not expect Fire TV's gaming initiative to be successful, as we do not anticipate that consumers will perceive a need to play mobile games on their TVs."

Not everyone thinks Amazon is too late to the game. In fact, Piper Jaffray analyst Gene Munster believes that the launch will force Apple to step up its game with Apple TV, forcing it to launch an updated device (or stick) quicker than expected.

"We believe the launch of the Amazon Fire TV highlights Apple's necessity to aggressively update its Apple TV offering and ultimately introduce a full television," according to a note. "Given the breadth of content available on Amazon's offering in addition to gaming capability and voice control, two features we have expected from Apple TV, we believe that Apple will launch at least an updated Apple TV by the back half of 2014 if not sooner. We also continue to expect a full TV in 2014 as we view set-top boxes as an intermediary step between the ultimate vision of a television that is seamlessly integrated with online services and cable, but with an intuitive user experience."

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