The e-commerce giant Amazon unveiled its long-awaited Fire Phone. But the handset pricing was a big surprise as industry watchers had expected it to be notably cheaper than competing iPhone’s or Galaxy smartphones. Amazon, famous for great deals, priced its first-ever smartphone at $199 for 32 GB and $299 for 64 GB with a two-year AT&T contract or $649 and $749 sans contract, essentially the same as Apple’s iPhone 5S. Amazon’s Fire Phone is priced competitively with the Apple iPhone 5S and Samsung Galaxy S5, but comes with 12 months of Amazon Prime for free.
Amazon is taking pre-orders for the device now through its website with a release date of July 25. The phone’s unsubsidized price without a carrier contract is $649 for the 32GB model and $749 for the 64GB one. The phone is only listed in black, and Amazon is releasing it through AT&T exclusively.
“Matching the pricing of Apple is surprising. But from one perspective, they don’t want to go in there and present a phone that is differentiated, yet much cheaper,” Jason Moser, senior analyst at the Motley Fool told CNBC on Thursday.
“The 4.7-inch phone equipped with 3-D imaging and gesture control features expensive, groundbreaking technology and Amazon is using the price to signal that, “added James McQuivey, principal analyst at Forrester.
The high price tag marks a shift in strategy for Amazon, which offered its tablets at deeply discounted prices in order to hook consumers.
The phone appears to have got the thumbs up from investors, with Amazon’s stock price rallying almost 9 percent to $334.38 by the close of Wednesday trade.
Ryan Huang, market strategist at IG says, “For it to be successful, Amazon will need to entice a small portion of its 250 million active customers to get the new smartphone.”
The phone described by some as a shopping device, includes a service called Firefly, whereby the phone can identify products using its camera and add them to your Amazon account.
Loyal Amazon consumers connected to the device could boost sales of videos, music and merchandise from its website.
A major challenge to the Fire Phone’s success, however, could be convincing potential consumers to switch over to AT&T, the device’s exclusive carrier from other mobile networks, notes McQuivey of Forrester.
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