We have talked about phone companies in the past. Remember those episodes about Blackberry or Motorola, companies who once were at the very top of the industry and somehow ended up falling in battle. Today, we will not exactly talk about a phone company but about a phone, yeah, a particular one.
A phone
that, for better or worse, had everyone's attention just by existing,
just because it was created by one of the largest internet companies in
the world: the Amazon Fire Phone.
What’s Amazon?
Now,
of course, Amazon is not a phone company, but what is it exactly? It's a
huge store, and it's likely where you get a lot of your stuff online,
even groceries in some locations, probably even more now that people may
be spending more time at home. But Amazon also provides web services to
clients like Netflix, NASA, or Slidebean.
It's also a media
streaming platform with its production studio for feature films and
series, and it also acquired the largest video game streaming platform, Twitch, for around $1B, in 2014. But it also had its line of diapers.
So,
what kind of company Amazon is? How do all these things connect? It
sounds like a brand that aims for global market domination somehow, and
seemingly with the Fire Phone, they had high hopes to create a product
that would unify it all into a worldwide, fresh brand. Something like
Apple or Nike, but for everything.
Then the story of the Fire Phone can be an Amazon story of company culture and identity. Let's break that down.
Although
the Fire Phone was a failure that meant big losses, Amazon remains a
large business thriving at the top of e-commerce and web services,
broadly speaking. But also yes, the Fire Phone may have taught a
valuable lesson about what kind of brand Amazon was and was not back in
2014.
When and why the Amazon Fire was created
Let's
start talking about when and why the Fire Phone was created. It's
probably a good starting point to talk about the Kindle electronic
reader, that first piece of hardware that Amazon built for end-users.
As
you may know by now, Amazon's e-commerce business was initially built
on books, CDs, and DVDs, and it was still on that foundation of books
that the Kindle reader was released back in 2007. With it, Jeff Bezos
stepped ahead and created the first electronic reader, anticipating the
digital future of books and reading.
Yes, a lot of Kindle's
success can be credited to Jeff Bezos’ vision and his determination to
innovate and enhance the customer experience.
Former Amazon
executives remember how he insisted that the original 2007 Kindle
included a cellular connection so customers could download and access
e-books from anywhere. Back then, critics thought the idea was an
exorbitant flourish that would eat into profits.
But his
foresight was essential to Kindle's success, and he silenced the
nay-sayers and short-term shareholders who doubted him. Just like when
he encouraged the free-shipping initiative and executives pushed back,
nervous about its impact on earnings.
Bezos prevailed and
later bundled free two-day shipping into Prime's subscription service,
which now boasts hundreds of millions of customers.
However,
the Kindle was a relatively simple device, especially compared to a
smartphone. Bezos wanted to make the Fire Phone a bigger hit, one that
would help Amazon be a cool lifestyle brand.
The Jeff Bezos phone
The
phone itself and all of its gimmicky features were attributable to
Bezos's creative mind. It got to a point where former product leads
reported a heated debate on the team about whether the phone was heading
in the right direction. But at a certain point, inevitably, they all
just relied on the man's pedigree of success.
So, let's get a closer look at the phone and remember what made it different.
At
first glance, it looked like any other Android from 2014, but it ran
Amazon's Fire OS, which was a stiffer version of Android without the
Google suite of apps or the Play Store.
A second look into the
phone's front would quickly reveal the five front-facing cameras. Yes,
five cameras: your regular front camera plus one on each corner of the
phone. A full-blown camera set up to track your face down and power the phone's most distinctive features.
For
example, the set of wrist movements and hand gestures that could be
used in some interactions with the phone, like navigating through menus
or pages. It all looked fancy, but I think we can agree that after a
time of interacting with the phone like that every day, it could quickly
become overwhelming.
But most importantly, this
face-tracking camera system powered what Bezos hoped would be the
phone's most distinctive feature: Dynamic Perspective.
Dynamic Perspective
And
he drove the team hard on this one, setting up a creative challenge
sustained basically in his desire: to create a 3-D display that required
no glasses and was visible from multiple angles. So, the key ended up
being facial recognition, which allowed the phone's cameras to track a
user's gaze and adjust the 3-D effect accordingly.
It looked
like the parallax effect some phones use today, where background images
move past the camera more slowly than foreground images, creating the
illusion of depth in a 2D scene.
As opposed to Bezos, the
rest of the team couldn't imagine useful applications for Dynamic
Perspective though, beyond some fun gaming interactions and flashy 3-D
lock screens.
In the words of a former engineering head at
the time, for Dynamic Perspective, "we poured surreal amounts of money
into developing it, yet we all thought it had no value for the customer,
which was the biggest irony. Whenever anyone asked why we were doing
this, the answer was, 'because Jeff wants it. '"
And
what Jeff Bezos ultimately wanted was to create a device cool enough to
stand out and compete with the iPhone. Make Amazon a loveable brand,
repositioning it away from being so mundane and towards becoming more of
a lifestyle brand like Apple.
Bezos also mentioned how brands
like Walmart and Microsoft, were somewhat "unloved" and suffered as a
result. So, in a way, Bezos wanted to make Amazon something more like
Apple and less like Walmart if that makes any sense. And it ended up not
making much sense.
In simple words: Apple or Nike fans would
spend any money on their brand to get a piece of it, while Amazon is a
brand you want to associate with good deals. Pretty much. In words of a
high-level source from Lab216 back then: 'There was a branding issue:
Apple is premium, while our customers want a great product at a great
price.'
And so, pricing the phone was complicated.
Bezos didn't want just another regular device, and the margins that a
low-cost phone could garner would be minimal, even if managed to stand
out in an ocean of cheap devices.
The only solution, some
inside the organization argued, was to differentiate the hardware enough
to justify a higher price point and hope to go after some of Apple's
profits. But Apple is a ferocious competitor with dominance in high-end
products, decades of rigorous R&D, a world-class design team, and a
unique approach to hardware and software.
The idea that
Amazon, a neophyte hardware maker whose CEO has shown no particular
affinity for design, could successfully attack Apple was unrealistic.
So,
as fresh and unique as Bezos wanted it to be, the Fire Phone had to
find its way back to Amazon's roots. So, another star feature of the
phone was Firefly. Using the phone's camera and microphone systems, you
could point the device at objects or media and find them in Amazon to,
of course, buy them.
The "Amazon.love" memo from Bezos helps
put the phone project into perspective. Amazon is one of the world's
most admired brands, a constant presence atop surveys of customer
satisfaction. But it's also a company that millions of people depend on
for good deals on boring products like low-cost paper towels, not a $650
smartphone.
Yeah, it ended up costing $650 upon release, or
$199 with a two year AT&T contract, back in 2014. That's the same
price of the iPhone 6, released that same year and one of Apple's
best-selling phones ever. The following comparison can be harsh, but
it's yet another definite proof of the Fire Phone strepitous fail.
Pre-orders
of the iPhone 6 and iPhone 6 Plus exceeded four million units within
its first 24 hours of availability, setting a record for Apple. Then,
ten million iPhone 6 and iPhone 6 Plus devices were sold only in the
first three days, marking another Apple record.
The Fire Phone, on the other hand, didn't pass the 35K units
sold in its first couple of months after release, according to a
publication on The Guardian from that year. Very soon, it was evident
that the phone had failed to appeal to Amazon's customers, and there was
no real interest from them in an Amazon-lifestyle type of product.
Reviewers
knocked the device for its gimmicky features, especially dynamic
perspective, which most found worthless and distracting. They also took
issue with the phone's bland industrial design and disappointing
ecosystem, since Amazon didn't offer the same library of apps or
cohesion of services as Apple.
But what Amazon got most wrong
was the cost: The Fire Phone was too expensive for its customers. In
October 2014, during the announcement of 3rd quarter financial results,
Amazon stated they took a $170 million write-down due to costs associated with the phone and had over $83 million worth of it in inventory.
Amazon's
CFO, Tom Szkutak, indicated that the pricing strategy was initially too
high and was the reason for the product's poor consumer reception.
And
that's how the Fire Phone taught Bezos and company a harsh lesson about
what the Amazon brand may and may not be. After this adventure, some executives and shareholders wanted to see the company refocus in its e-commerce business and start enjoying its profits after years of aggressive growth.
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