There’s been a lot of talk over the past few days about Amazon trying to buy developers by giving them $5,000 to build an app for the Fire Phone, up to a max of $15,000 for three apps. When I first heard this story, I thought Amazon’s plan was misguided, that they’d lay out a ton of money to buy their way into undisciplined relevancy, with an indiscriminate copy of apps that are available on Google Play and other Android app stores. Sort of a “me too” strategy.
But that’s not quite right.
First off, Amazon is not offering cash to developers. They are offering 500,000 Amazon Coins, which Amazon values at $5,000, that developers can give away for promotion:
Amazon will offer 500,000 Amazon Coins ($5,000 value) for each of your qualifying paid apps or apps with in-app purchasing that meet the additional program requirements for Fire phone (up to 3 apps per developer). You can create campaigns via the Promotions Console to give these Coins away to consumers purchasing any of your paid apps or in-app items.
This is very different and, I think, a smart play. Rather than a cash bounty, which will draw short term thinking developers, Amazon is giving away something that will help developers build their business. I think this will bring in more long term thinkers, more apps with a story to tell.
Amazon has also laid out a specific set of requirements that will ensure that these apps are unique to the Fire Phone, taking advantage of Amazon’s various APIs, where they apply and, in addition:
Games must use the Dynamic Perspective SDK to create an in-game experience that responds to a user’s motion relative to the device. Note that games that merely replace swipe-based controls or gyro functionality with head tracking will not qualify. The game must use head tracking to implement an in-game experience. Examples include the ability for a user to pan and zoom the field of view in a game by moving the device back or forward or the ability to rotate the device about any axis to change the viewing angle of the surroundings.
Here’s a link to the requirements page.
And what does this mean for Apple? If the Fire Phone does get some traction, I think this success will further splinter the Android software universe and raise competition with other Android phones, as well as with Samsung and their new OS, Tizen, a Linux-based open-source Android competitor.
I don’t see Fire Phone eating into the iOS market share. The Fire Phone might have a few compelling features, but it does not offer enough of a critical difference from other Android phones to pull iOS users out of the iOS ecosystem. In other words, though there will always be drift from iOS to Android and back, the Fire Phone does not critically change that balance.
And this kind of feedback does not help.
Will Fire Phone succeed? Everything I’ve read about Amazon’s development program tells me they will achieve some level of critical mass. Amazon has the cash to ride this out, if developer adoption takes time. The key, I think, is that they are aiming to compete, quality-wise, with Android, and not with iOS. A smart decision.
They throw in a year of Prime at $99 per year. If you’re a Prime junkie (you know who you are) then this is a sweet deal and Amazon is happy to feed your addiction.
Remember, they make money selling you stuff. If it drives up revenue then they win. That’s why the never report volume numbers on devices. They simply don’t care about that number as much as your sales volume.
One thing is for certain… come Monday after release we’ll have a hype statement from Amazon about how they outsold their expectations with FiPo (Fire Phone). No actual number will be released but lots of hyperbole.
That is true with their tablets, which are low-margin, but that is not true with Fire Phone, though, which is a high-margin device.
Doesn’t matter how much of an Amazon Prime junkie you are — do you want to pay the same price as an iPhone for an Amazon phone that basically only runs Amazon?
Even with selling at cost, the Amazon tablets well only a tiny fraction of what iPad sells. With the Amazon phone, they are not selling at cost, they are selling for the same price as an iPhone. So it will be interesting to see how many phones they sell.
im a prime subscriber, because I want the shipping savings. why is this phone a sweet deal? how does it improve my mobile computing usages? why would I want it over the iOS ecosystem which is much richer to me as a user?
It depends how much you like shopping and use Amazon. It would be a waste on me, and probably you. It’ll use the Amazon app store which has about 200,000+ apps so it’s not like it will only run Amazon apps.
This is targeted at Amazon’s higher end customers. If it works then they’ll find other ways to go down market.
If you don’t have to pay Amazon prime fees for a year then the phone drops $100 bucks. And if you’re American then you get the all the content on top of the shipping savings.
If you like the iOS ecosystem (like I do) then it’s not that interesting. However I don’t think Amazon’s strategy is to try and steal happy iOS customers. Digital sales are currently only about 5% of total US sales – they are looking for ways to increase that number by pushing their sales presence out of the house.