I’ve written a lot of headlines in my life but this one is among the oddest. Why on earth does a phone need to be a laptop? I know what you’re thinking… Rich Tehrani flew to Colorado to do a story on legalized marijuana which includes sampling. But unlike some others, I didn’t, I swear.
You see, my thought process is as follows. Amazon needs to expand its empire but the phone market is too saturated.
Microsoft had two versions of the Surface – both of which were likely bought exclusively by the families of Microsoft Personnel. They stunk. I wouldn’t use one for free. They remind me a lot of the Fire Phone which I think is technically robust but the market is giving a “Microsoft Surface” like reception.
Why did Microsoft fail? They were trying to take the iPad head-on with products which weren’t nearly as good. This was made even more difficult by the fact that Android tablets were cheaper and ran a ton more apps. There seemed to be few good reasons to buy a Surface 2.
What did Microsoft do in response? They came out with Surface Pro 3 which is a laptop replacement and tablet in one. After using it for many months, I am impressed with its ability to be a strong laptop replacement. Personally, I haven’t used it as a tablet much but it is nice to know I can if I need to. In fact, credit goes to this device for almost doubling Microsoft’s QoQ Surface sales.
And laptop success isn’t unique to the SP3. Chromebook sales are on fire as of late as well. How so? Try 67% increase QoQ!
Even Apple is having even better success selling Macs recently.
In short, the laptop market has huge potential if you come out with a differentiated product. This means Amazon, a company that wants to tie you into their ecosystem more completely should kill the phone and seriously consider this market.
The ecommerce leader has already lowered the price of the Fire phone by $199 to $0.99 and yesterday they started to throw in a $129 tablet value if you purchase the phone. Why so aggressive you ask? Well, this was the same day they announced they are taking an $83 million charge for unsold Fire Phones.
There really isn’t much more the company can do to make a smartphone people will buy. I feel especially confident making this claim as they don’t seem to be able to pay you to use their current product. Consider – it has Dynamic Perspective, giving 3D effects, Firefly which helps you buy things more quickly, Mayday to answer your questions, unlimited photo storage and lots more. What we knew before this phone was released is people don’t want another phone vendor. Blackberry and Nokia couldn’t keep their users and at one point they had enormous brand loyalty. It takes supreme self-confidence to think you could do what they couldn’t. What we know is, consumers seem to be happy with Apple and Samsung and in Asia they also like Xiaomi and to a lesser extent Huawei, ZTE and a few others.
But there has been a lot of success in the laptop market from companies who have to some degree reinvented the market. Microsoft gave us a laptop/Ultrabook/tablet hybrid which is good at a lot of things but perhaps not great at any. Apple gives us amazing designs, light weight, great battery life and pricing which is getting better; starting under $1,000. Chromebooks give us a minimalist device with expanded functionality and more reliance on the cloud than typical PCs.
Amazon can mix-and-match some of these ideas, throw in cloud services, Prime and other value-adds. I get the sense this is the better angle to take if you are looking to expand your ecosystem value.
The company is very late to the smartphone game. Had they launched Fire two years ago and made it the size of a Galaxy Note 4 or an iPhone 6 Plus, it would have had a much greater chance for success. Now though, it is undifferentiated by hardware and the software bundles just isn’t compelling enough to get customers to budge.
Let’s just hope Bezos and company realize this and offer us a new Amazon FireTop in the near future. After all, if they continue unsuccessfully pushing a smartphone into a saturated market, the financial analysts are going to think they’re on something.