Amazon Fire Phone could spell disaster for retailers

Amazon (NASDAQ:AMZN) unveiled its much anticipated smartphone called Fire, and the device stands to deepen the retailer's connection to its 250 million customers.

The Amazon Fire Phone is a retailer's dream, if that retailer is Amazon. For the rest, Fire could spell disaster.

Amazon's Fire Phone is a smartphone four years in the making, according to CEO Jeff Bezos. It features two new "breakthrough" technologies that could be either gimmicks or game changers. One in particular, stands to impact retailers in a big way.

Fire Phone's killer app is something called Firefly, which uses the phone's microphone and camera to recognize any real-world product. There's even a dedicated button that bypasses the phone's lock screen to instantly take shoppers directly to the product page—on Amazon of course.

"The Firefly button lets you identify printed web and email addresses, phone numbers, QR and bar codes, artwork, and over 100 million items, including songs, movies, TV shows, and products—and take action in seconds," said Bezos.

This predictive technology that automatically recognizes items is showrooming on steroids. Shoppers will be able to instantly price compare, and buy, an item they find for less on Amazon.

Of course, Fire has plenty of other features and applications.

There's something called Dynamic Perspective, a feature that lets the user tilt the device to gain a different perspective of what's displayed—such as a map or video game. A Mayday button for quick Amazon customer service, predictive viewing that queues up content that Amazon thinks a user will want to watch next, and free unlimited cloud storage for photos taken with the device.

Fire is integrated with Amazon content and the Prime membership program. Members get unlimited streaming, access to music and the Kindle library. There's even an introductory offer that gives early adopters of Amazon's smartphone one year of free Prime membership.

Bezos made no mention of mobile payments during the announcement but it seems inevitable, especially now that Fire Phone opens a direct line between the retailer and shoppers through their most indispensable device.

There are no guarantees that Amazon's phone will catch on, but Amazon has some 250 million active customers and 20 million reported Prime subscribers. If even a small percentage of those become early adopters, the device will get a nice start.

Amazon's Fire Phone is available exclusively with AT&T and pricing begins at $199 for a 32GB model with a two year contract. There's also a 64GB model for $299. It ships July 25.

For more:
-See this Amazon press release
-See this New York Times story
-See this Payments Source article

Related stories:
Amazon to add local services; battles with Time Warner
Amazon expands payments, PayPal founder launches Affirm Split Pay
Amazon adding limited streaming music to Prime
Amazon launches Prime Pantry
New Amazon Fire takes aim at Apple