To Jeff Bezos, the key to Amazon.com’s success with the new Fire Phone will be whether it offers something customers can’t get from rival devices.
Amazon wasn’t going to dive into the mobile-phone business with a me-too device to woo customers, the company’s founder said. Instead, he believes the company needed to come up with a phone that has something unavailable elsewhere.
In an interview with The Seattle Times, Bezos highlighted two features. The first, Firefly, uses the phone’s camera and microphone to instantly recognize book covers, labels, bar codes and songs, and lets customers shop for the item or search to learn more about it.
The other, Dynamic Perspective, is a sensor system that lets users tilt the phone to navigate websites, fly through items on Amazon’s shopping site and dig out information from a map application.
In the interview, Bezos talked about how the new features differentiated the Fire Phone from rivals, and how the company would be patient as it worked to build customer enthusiasm for the device.
Here’s an edited version of that conversation:
QUESTION: Why does Amazon need to have its own phone?
ANSWER: We don’t. Our product-development process works very differently from that. If you go back four-plus years, we didn’t ask: “We need a phone. What are we going to do?” We asked instead: “If we are going to build a phone, how are we going to be different?”
Our development process always starts with an idea. It has to be differentiated. What’s going to be unique? And it has to be differentiation constrained by something that customers will find useful.
What later got named “Dynamic Perspective” and what later got named “Firefly,” those were the two winning ideas. We said that if we can make that work, it would be something that would be really useful.
Q: Does your research show that customers are willing to switch from iPhones and Android devices for features such as Firefly and Dynamic Perspective?
A: Here, you have to put yourself in the right mental model of one customer at a time. A lot of businesses make this mistake. A lot of people would say, “You’re late to the smartphone game. It’s too late.”
If you take that line of reasoning to its logical conclusion, then basically what you’re saying is that there can never be new entrants in any arena, which we know isn’t true. These things do change.
We’re incredibly early in wireless devices. The players come and go. They switch. They change.
We want to build a phone that for many customers – it doesn’t have to be all, but for many customers – they’ll see value in it. Our job is to take that as a beginning and put one foot in front of the other. We have a long track record of being patient, working to improve those things, being customer-centric about it the whole time.
That said, plenty of people have mobile devices today.
And people do switch. They switch at certain events. They switch when their contract expires or when they break their phone.
Q: Will Firefly and Dynamic Perspective drive people to switch?
A: Those two are very unique and very important, and they will drive people to like the phone. But I think it’s too simplistic to say, “Is this the feature that’s going to get people to switch?” I would resist that. I think you have to look at the totality of it. We put a huge amount of effort into making this a great phone.
What doesn’t work is going up against an established competitor with a me-too product. Our job is to build great products, and then customers get to choose.
Q: How much do you worry about rivals such as Apple and Google dominating the mobile-phone-platform business when media consumption and mobile e-commerce are taking off?
A: I have a different opinion about that. We don’t need to do this. In business, sometimes people get crossways if they start thinking defensively. We think we had a great idea to build a better phone. My view is that’s the right thing to do. You want to be motivated by opportunity.
Q: Do you have no concerns about Apple and Google, which are increasingly becoming competitors of Amazon’s, dominating the mobile-phone-platform business? Do you think they would not let their customers shop on Amazon?
A: They could make it more difficult.
It’s pretty speculative. To me, it doesn’t seem like a credible future scenario.
Q: With other devices, Amazon has said it tries to break even when it sells the devices and make money when customers use them. Is that the model here?
A: Yeah. It’s a little different because you subscribe to phones and we’re partnering with AT&T. They are going to make this a hero product in their stores. We’re using their business model. The phone has so much premium hardware in it that it is a very aggressive price point.
We don’t want to lose money on hardware, because then I also think that gets you misaligned with customers. The advantage of this is that we never have to get customers on an upgrade treadmill. We don’t care.
Q: Do you expect mobile-phone shopping to be higher for users of the Fire Phone than the general population?
A: I don’t know. Phones have a lot of surface area. If you look at how phones are used, they are primarily about email and messaging, and occasionally a phone call.
Even though shopping is a very important piece – and we know internally that people are using their phones more and more for mobile shopping – it’s not the biggest piece. It’s an important activity. It’s certainly in the top 10; it might be in the top five. But it’s not the top one.
Q: One thing you didn’t discuss Wednesday morning was the data that Amazon will be able to collect from the way customers use the phone. Amazon uses customer data to optimize its website. Do you anticipate doing the same thing with the data you collect on phone usage?
A: I don’t think there are many features that do that. If there is something there where we can create real value for customers, and if we can do it in a really transparent way, (then we’ll do that). I don’t think (the phone) does very much in that regard.
Q: What are the metrics that you will use to measure the success of the Fire Phone?
A: Just like with Prime, I always want to see people using our services. If the early people who buy this phone are satisfied, if they’re engaged, if they are using it, if they love the features, that’s a very important set of metrics to watch.
It’s one customer at a time. Our job is to build a great product and then be patient.