Apple won't lose sleep over Amazon's Fire Phone

Apple won't lose sleep over Amazon's Fire Phone

Amazon's first smartphone isn't disruptive enough to keep Cupertino up at night, analysts agree

Amazon today unveiled its first smartphone, the Fire Phone, at a Seattle event where CEO Jeff Bezos touted the integration between the device and his company's web of services, including the millions of products it sells.

Amazon's Fire phone and its recognition app called Firefly aren't likely to worry Apple execs. (Photo: Amazon)

But no one in Cupertino, Calif. will be losing sleep worrying whether the Fire will snatch share from the iPhone, analysts said.

"No, I don't think Apple has anything to worry about," said Van Baker of Gartner in an interview. "Will the Fire [Phone] steal share from people in the iPhone ecosystem? No."

Carolina Milanesi, chief of research and head of U.S. business for Kantar WorldPanel Comtech, agreed. "iPhone users will stick with Apple," Milanesi said.

Her take was based in large part on the pricing of the Fire Phone, which will be available only on AT&T in the U.S. A Fire Phone will cost $199 (with 32GB of storage space) or $299 (64GB) with a two-year contract -- and $649 sans a commitment. While those prices are lower than an iPhone 5S -- which starts at $199 for a 16GB device -- they're in line with many other non-Apple smartphones.

"If Amazon had come out aggressive on the plan or the price, it would have a bigger appeal," Milanesi said. She had expounded on that theme during Bezos' presentation when she tweeted, "If the $199 on 2yr contract is all there is to Fire Phone pricing it will be a tough sell."

Others echoed Baker and Milanesi in their analysis of the Fire Phone's impact, if any, on Apple's iPhone.

"Most iOS users are incredibly loyal," noted Ezra Gottheil, an analyst with Technology Business Research. "There may be some [deserters], but it will be a small number, probably those who are already committed Prime customers who want the extra benefits of Amazon's phone."

"Not at all," said Jan Dawson of Jackdaw Research when asked whether Apple should be concerned. "It was always going to be a marginal product, one highly targeted at Prime customers. At the price that they launched it, there's nothing compelling about the Fire Phone."

In a longer emailed analysis, Dawson elaborated. "For all the talk about disruptive business models ... this really isn't a very disruptive phone. It acts more or less like any other phone on the market when it comes to the things people use their phones for," Dawson said.

The analysts' repeated references to Prime was a nod not only to Amazon's loyalty reward program, which costs $99 annually for benefits ranging from free two-day shipping to free access to audio and video content, but also to the tight integration between the Fire Phone and Prime. Amazon is bundling a one-year Prime membership -- a $99 value -- with each smartphone; current Prime customers will have their membership extended by one year.

History is also on Apple's side.

"Amazon entered the tablet market in the fall of 2011 with the Kindle Fire, which was dubbed by the media as the 'iPad killer,' but we have found the impact to Apple has been almost non-existent," said Brian White of Cantor Fitzgerald in a note to clients after Bezos wrapped up. White ticked off other moves by rivals -- from Google's Nexus smartphones and tablets to Microsoft's Surface 2-in-1 -- that have failed to move the needle against Apple.

In the same note, White predicted that Apple would be "unfazed" by the Fire Phone and that Amazon's entry is more about "media buzz than a realistic threat to Apple."

"The real question for Amazon is whether they can get enough traction, even a few percentage points," said Baker. He didn't see that share coming from Apple.

That leaves Android.

"The play is against Android," said Gottheil. The Mayday service is a bigger differentiator from the Android experience than it is from an Apple experience," he argued, talking about the Fire Phone's one-button access to a live technical support representative. "Apple doesn't have tech support standing by like that, but it does have a better customer service experience than Android overall."

But for all the analysts' assurances, isn't there at least a chance that Apple might respond in some way to the new competition? Milanesi didn't think so.

"No, Apple doesn't really react," she said. "[After all], there's always something new [from rivals]. Maybe by the time the next iPhone comes in we might see something [as a reaction], but Apple almost always sticks to their strategy. They tend to keep to their own path and not get distracted."

And from what the experts could see, Amazon's Fire Phone failed to generate any meaningful distraction, or disruption.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is

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