Don't Laugh at Amazon's Smartphone - You're Going to Want It

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An office building occupied by Amazon.com in Sunnyvale, California.
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The next phase in Amazon's (AMZN) plan for world domination will be unveiled next week. The leading online retailer has scheduled a media event for June 18 in Seattle.

Reports surfaced in May that Amazon was set to introduce a smartphone with holographic features to deliver 3-D viewing, and that seems to be exactly what we're going to get come Wednesday. Amazon's video in anticipation of the media event finds people tilting their heads as they admire the device's display, lending credence to the chatter that the smartphone uses several cameras to track facial movements in order to project images with depth.

It's been more than a year since the market started talking about Amazon's inevitable foray into the smartphone market. It may be late to the party, but it's entry may also be disruptive -- and that's exactly what you need to do if you show up to a revolution with a tardy slip.

The Path of Disruption

Amazon.com follows a pretty familiar pattern when it introduces proprietary products. It rolls out its entry once the market has already been established, then stands out on price or features.

For example, at $399, the original Kindle may have been overpriced as an e-reader, but it quickly evolved into a low-cost market disruptor as it slashed prices and improved its platform. The Kindle wasn't the first electronic reader, but it became the industry standard as a result of aggressive price cuts and a strong digital storefront.

Kindle Fire came next, and Amazon certainly wasn't a visionary on the tablet front. This was Apple's (AAPL) domain, and other tech giants trying to take on the iPad failed initially by pricing their tablets too high. Amazon went for the jugular by rolling out its gadget at $199, less than half what Apple was commanding for its iPad at the time.

Fire TV is Amazon's most recent salvo. At $99, it's not the cheapest set-top media player out there. Roku, Apple TV, and even Google's (GOOG) Chromecast are at that price if not substantially lower. However, Amazon hopes to appeal to its more than 20 million Amazon Prime customers with a small device that makes it easier to stream the movies and TV shows that it makes available to subscribers. There's also a voice search feature that's more advanced than what rival products are offering.

This brings us to the device that Amazon will introduce on June 18. If it lives up to the early reports it will raise the bar as to what is actually possible with a smartphone.

Don't Drop the Ball or the Call

An Amazon smartphone isn't likely to command the kind of margins that Apple gets away with on its iconic iPhone. Amazon knows that there are bigger fish to fry with its tweaked Android operating system that dovetails perfectly into is app marketplace.

The next-generation display will take video and even games to the next level, and those are two categories where Amazon can really set itself apart. If Amazon is able to get a large enough installed base of users, developers will flock to make games and other applications for the device. Movie studios will also want to explore what's possible as a result of these rich displays.

Amazon's coming in with what seems to be new technology and it will probably come in at an aggressive price. In other words, Amazon is ready to make up for lost time by moving ambitiously on both fronts where it has excelled so far.

Amazon's not early, but it's not too late to have the last laugh in the mobile market.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple and Google (C shares). The Motley Fool owns shares of Amazon.com, Apple and Google (C shares).


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