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June 2012
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Amazon ties phone to its services


SEATTLE - Amazon has introduced a new smartphone that seeks to help consumers locate and purchase products and services from the nation's largest e-commerce company.

The Fire phone comes with audio and object recognition technology, known as Firefly, to guide users to Amazon's stores. Just snap a photo of a book or listen to a song, for instance, and Firefly will present more information and a way to buy it.

The new device fits with Amazon's broader aim to create a more efficient shopping experience while steering more consumers to its retail products.

"It goes back to the mission of Amazon, which is to sell you stuff," said Ramon Llamas of the research firm IDC. "It reduces the number of steps it takes to buy things on the phone."

Fire also has the ability to render 3-D images on its 4.7-inch screen. The image shifts based on the angle you're viewing it. Four infrared cameras on the front are used to tell where the viewer's head is.

The device also comes with earbuds designed to be tangle-free.

Beyond that, the Fire phone doesn't differ much from other smartphones on the market. The screen is smaller than leading Android phones. Although CEO Jeff Bezos calls the Fire's size ideal for one-handed use, many consumers have turned to bigger phones to watch video and consume other content.

Persuading consumers to buy the Fire over an iPhone or Samsung phone will be tough, analysts say, particularly because Amazon isn't offering price breaks the way it has with Kindle tablets. And sophisticated technology such as 3-D will appeal primarily to early adopters of technology.

"The technology's cool, but consumers don't buy technology," said Julie Ask, an analyst at Forrester Research. "We buy solutions. We buy services. We pay for things that make our lives easier."

Charles Golvin, founder of Abelian Research, believes the phone will appeal mostly to people who already use Amazon services heavily.

"Any loyalist of iPhones or Google is going to have to judge whether there's enough value in what Amazon is offering with Fire to make the transition," he said.

Samsung and Apple dominate worldwide smartphone sales with a combined 46 percent share, according to IDC. And in the U.S., Apple leads with more than 37 percent, with Samsung at nearly 29 percent.

Amazon could potentially succeed even if it doesn't steal market share from the top phone makers.

Michael Scanlon, managing director with John Hancock Asset Management, said success or failure will be measured by whether Amazon can increase loyalty among its Amazon Prime members and get them to boost purchases.

Amazon is giving Fire owners a free year of membership, which normally costs $99.

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