GOTfinal

A Game of Phones: Amazon’s Uncertain Revolution

By Carla Rover

Amazon’s release of Fire, more than an alpha-stage insurgency against Apple’s and Google’s sovereignty over consumer data and electronics, is the beginning of a battle for the throne in an era of consumer-centric, ecommerce-rich HD content.

“Fire (gives consumers)—instant access to Amazon’s vast content ecosystem” Bezos stated. “And this is only the beginning—the most powerful inventions are the ones that empower others to unleash their creativity—we can’t wait to see how developers surprise us.”

Amazon’s Mobile Ambitions

Bezos, who at Amazon’s press conference used an episode of Game of Thrones to showcase the phone’s ability to recognize elements of digital content and then draw consumers directly to a relevant shopping cart and info page, is making a risky move, say some analysts. The phone retails for $199 with a 2-year AT&T contract, but sells for $649 unlocked. The price tag underscores Amazon’s belief that Fire is a legitimate competitor to Apple’s crown jewel, the iPhone, even before Amazon’s digital streaming roster has successfully unseated Netflix and Hulu.

Amidst Bezos’ happy talk about Amazon’s efforts to “surprise” the ecosystem, is a hint of the breadth of Amazon’s mobile ambitions; an offer to brands and developers to help remix Amazon’s ecommerce strategy.

Amazon wants new apps and is opening up its DNA—Amazon Fire’s SDK( software developer kits) — for developers to help it compete with Apple, but its real offer isn’t only meant to lure those hoping to sell a few thousand apps. Amazon, by releasing its SDK, is inviting retail brands and content producers to dabble in its alternative ecosystem and build apps that make it easier for consumers to find and buy brand name products and premium content via mobile.

Fire makes impulse buys a seconds-long, rather than a minute-long process through its Firefly content and product search tool with a dedicated button on the interface. Combined with Amazon’s Cloud resources, Fire could be the company’s most logical move towards developing a massive social shopping platform inclusive of content and consumer goods.

Bezos’ new data-mobile-commerce strategy attacks the digital ecosystem’s ad tech and Big Data powers-that-be at their weakest point–profitability and consumer engagement–by attempting to take Amazon’s 100% shopper audience and converting them into content consumers and vice versa. This may be tempting for brands and retailers, provided that Amazon can deliver its user base.

Unlike Apple, Amazon has a massive audience of millions of viewers who land on the website already looking to buy major brands, skipping easily from content to commerce, trailing precious behavioral and retail data behind them with every click.

Amazon’s Mobile Audience Might Be Limitless

According to some analysts such as Forrester’s Julie Ask, Amazon is in a unique position to upend the digital ecosystem by integrating ecommerce, premium content and opt-in Big Data tracking with mobile via its single platform. That position, according to Ask, also means that the company and its device and content strategy is highly vulnerable to the market as well as the competencies of its formidable competition.

Bezos stated that the phone was designed to help expand the impact of Amazon’s growing catalogue of digital content from Web to mobile, ostensibly creating a triple-threat challenge to Apple, Google and Hollywood’s status quo in one go.

Long overlooked as a major content and device player despite its leadership in ecommerce and massive trove of consumer data, Amazon indicated its willingness to move aggressively early this year at the 2014 CES fair in January.

During that CES event Samsung announced a development and content distribution partnership with Amazon using its “4K Ultra Hi-Definition” (UHD) video technology that is rendered at four times the resolution of regular HD video. Amazon later released a statement stating that Amazon Studios—its content development wing—will be shooting new series in 4K and is in partnership with Warner Bros., Lionsgate, 20th Century Fox and Discovery on new, unspecified projects.

The significance of Amazon’s stealthy partnerships is immense. Amazon, utilizing its ability to marshal the “also-rans” of the device world, appears to be attempting to helm an uprising in the mobile and digital content ecosystem, using new alliances with Hollywood to bolster its claims.

Amazon’s Powerful Partners

The first volley: Amazon partner Samsung’s statement in January that it would acquire UHD content through strategic partnerships and “bypass cable and disc delivery methods.” This means Amazon can deliver its new entertainment series to devices that will display sexier graphics and potentially native ecommerce apps—all gathering data and updating content incessantly. Unlike Netflix, Amazon could conceivably not only create another “Orange is the New Black,” it could do so within its own brand-driven ad network and shopping ecosystem.

It also means that location-based services, be they ecommerce or bricks-and-mortar, can skip the online content licensing bureaucracy and connect with consumers and their data easily, presumably through Amazon.

Amazon’s arrow, via Samsung, strikes deep at the heart of the “content-is-king” dominance of major networks and studios. Netflix and Hulu won’t always own binge-watching if Amazon manages to wrest more premium content from Hollywood.

Netflix’s and Hulu’s abilities to bring brands to engaged consumers within content may end up being an Amazon affair simply because of Amazon’s ecommerce legacy. Netflix and Hulu don’t and probably will not ever have Amazon’s ecommerce abilities or level of access to fresh consumer retail data.

Amazon’s Commerce as Content Paradigm

What Amazon can’t offer by way of digital entertainment it can provide to its audience in the form of exclusive deals for popular content franchises like Game of Thrones. Because Amazon offers a full-fledged ecommerce ecosystem of its own, it can seduce content brands like HBO to participate in its push forward in ways that even the most popular content-only platforms cannot.

Amazon’s second effort at disruption is its new approach to flexing ecommerce muscle. The company’s ability to instantly deliver paying customers from a native environment—ad tech and content’s Holy Grail— is the core of its newly pivoted business model.

“As we grow our footprint, we get closer and closer to customers with additional selection,” said Thomas J. Szkutak – Amazon SVP and CFO on the April 2014 earnings call. “We are seeing that customers do like digital content. We are seeing great engagement. We look at customers that use our Prime Instant Video, what their shopping patterns look like outside of digital content.”

Amazon Prospects: A Mixed Bag

Unlike every other content distribution network, Amazon doesn’t have to post millions of ads to find one shopper. Turning Amazon into a digital content studio anchored to mobile ecommerce makes sense, but only if it can popularize devices that can challenge Apple’s dominance. Amazon has shown that even if it can’t build its own tech stack, it can pull in unlikely allies to stage a royally disruptive coup.

Tech journalists have offered lukewarm and skeptical reviews of Fire and analysts suggest that Amazon still has much to prove—as Facebook and Google have been unable to launch successful phones. Consumers might also cool to the idea of incessantly being sold items and targeted with offers, regardless of the ease Amazon offers.

Will a generation discard their iPhones for an Amazon Fire anytime soon? Probably not. It might not matter, however, as Amazon’s ability to shift the attention of the ecosystem may be all it needs to chip away, slowly, at a lopsided digital kingdom.

Learn more about Amazon Fire here.

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Carla Rover