Is Amazon Becoming the Next Apple?

NEW YORK (TheStreet) - Is Amazon (AMZN) becoming the next Apple (AAPL)?

The Seattle e-retailer is reportedly planning its next step into the hardware business by launching a smartphone to compete with the likes of Apple's iPhone and Samsung, according to The Wall Street Journal. Amazon has been meeting with developers in San Francisco and Seattle in recent weeks to demonstrate the device. Amazon plans to announce the device in late June, and begin shipping by the end of September, in time for holiday selling season, the Journal reported over the weekend.

Amazon did not return an emailed request for comment by TheStreet.

The smartphone device would be Amazon's latest foray into the hardware industry. In the past, Amazon did not put place too much emphasis on the development of hardware, instead using a razor-razorblade model, where if consumers purchased a Kindle or Kindle Paperwhite, for instance, it would open them up to a myriad of downloadable books, magazines, newspapers and accessories, but the device itself was less than adequate.

Amazon's media sales, which includes digital content like movies, MP3 music, books and magazines, among other things, rose 9% in 2013 to $21.7 billion, or 29% of the company's annual net sales. Yet, at this month's Fire TV launch, Peter Larsen, Amazon's vice president of Kindle, noted the company is working on creating "premium" hardware for consumers for a value price.

Amazon Fire TV, is its latest entry into the hardware market. Amazon's set-top box connects to consumers' televisions to the Internet and streaming services that will compete with Apple TV, Google's (GOOG) Chromecast and Roku.

Amazon touted Fire TV's "powerful performance" in the announcement, which includes "quad-core processor with over 3x the processing power of Apple TV, Chromecast, or Roku 3, a dedicated GPU, plus 4x the memory of Apple TV, Chromecast, or Roku 3 for exceptional speed and fluidity," which also includes "stunning 1080p HD video and immersive Dolby Digital Plus surround sound."

TheStreet contributor Gary Krakow called Fire TV "the streaming video device for the others to beat"  noting features like X-Ray, which turns your Fire HDX tablet into a second screen, search by voice and the quad-core Qualcomm processor all add to the set top box, making it "a much more powerful device, capable of great things."

Amazon is also appealing to the gamer community by making Fire TV a gaming console, with 100 game titles available and an optional $40 game controller.

The move by Amazon into the set-top box market builds on its expansion of the Kindle Fire tablet. Amazon launched the Kindle Fire HDX, its latest tablet version in late September. The latest Kindle version, available in 7-inch and 8.9-inch versions, is a vast improvement from its last one, complete with a smoother operating system that makes browsing and navigating easier. It supports more than 200,000 apps and games, according to CEO Jeff Bezos recent letter to shareholders. That's impressive, but still a far cry from Apple's App Store.

Kindle Fire HDX's most buzzed about feature was its "Mayday" button, which makes an Amazon expert appear on screen for free, at any time, to show users who might need assistance in operating the tablet. Amazon touted that the average response time for assistance on Christmas Day was 9 seconds, beating its expected 15-second time.

However, consumers already know that when it comes to high-end hardware in phones, computers and tablets that's where Apple shines. Apple is getting ready to launch an updated set-top box, which reports have stated could come as early as this month. The latest device version will have a faster processor and improved interface to make it easier for customers to navigate between TV shows, movies and online content.

The Cupertino, Calif.-based company is also gearing up to release its latest iPhone version, which at least one analyst speculates could go further upmarket by raising the price of the device itself by $100. Apple already sells its iPhone 5s for $199 with a two-year contract. Jefferies analyst Peter Misek believes that Apple has been trying to negotiate price raises with carriers on the new iPhone.

If Amazon's smartphone report is true, it would be entering an already tough marketplace, dominated by Apple and Samsung. The article says Amazon is looking to differentiate the phone with "a screen capable of displaying seemingly three-dimensional images without special glasses," citing people briefed on the company's plans. The "phone would employ retina-tracking technology embedded in four front-facing cameras, or sensors, to make some images appear to be 3-D, similar to a hologram," the Journal says.

Will that be enough to get consumers on board?

--Written by Laurie Kulikowski in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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